The Capitalist Manifesto: The Atlas Society Asks Johan Norberg

December 13, 2023 01:00:24
The Capitalist Manifesto: The Atlas Society Asks Johan Norberg
The Atlas Society Presents - The Atlas Society Asks
The Capitalist Manifesto: The Atlas Society Asks Johan Norberg

Dec 13 2023 | 01:00:24

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Show Notes

Join CEO Jennifer Grossman for the 183rd episode of The Atlas Society Asks, where she interviews returning guest Johan Norberg about his new book "The Capitalist Manifesto."

Johan Norberg is a Cato Senior Fellow and the author and editor of more than 20 books that focus on globalization, human progress, and intellectual history. He previously joined The Atlas Society Asks to discuss his book "Open: The Story of Human Progress."

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Episode Transcript

[00:00:00] Speaker A: Hey, everybody. Welcome to the 183rd episode of the Atlas Society asks. My name is Jennifer Anju Grossman. My friends call me Jag. I am the CEO of the Atlas Society. We are the leading nonprofit organization introducing young people to the ideas of Aynran in fun, creative ways, including graphic novels, animated. Now I animated video, even music. Today we are joined by a returning guest, Johann Norberg from Sweden, where it's 11:00 p.m. So you guys better have some good questions so you can start typing those questions in no matter which platform you're watching us on. Zoom, Instagram, Facebook, Twitter, LinkedIn, YouTube, go ahead and put them into the queue. We'll get to as many of them as we can. So our guest, Johan, is a Cato senior fellow and the author and editor of more than 20 books that focused on globalization, human progress, and intellectual history. He previously joined us on an earlier episode of the Atlas Society asks to discuss his book, open the story of human progress and its powerful message of humanity's embrace of openness as the key to our success. He expands on this triumphant idea of, quote, the freedom to explore and to exchange with his newly published book, the Capitalist Manifesto. Johan, thanks for joining us again so late. [00:01:40] Speaker B: Thank you for having me back on the show, Jennifer. My pleasure. [00:01:44] Speaker A: And thanks also, as I mentioned, for joining us very early on, back in December of 2020 for what was then our 29th episode of the then fledgling the Atlas Society asks now, back then, Donald Trump said Sweden is paying heavily for its decision not to lock down. The New York Times called Sweden, quote, the world's cautionary tale, and described it as a pariah state. Now, you recently wrote a policy analysis for Cato entitled Sweden during the pandemic, pariah or Paragon, you conclude, quote, it was not Sweden that engaged in a reckless, unprecedented pandemic experiment, but the rest of the world. This experiment did not turn out well compared to the one country that did not. Throughout the manual, millions of people were deprived of their freedoms without a discernible benefit of public health. Can you elaborate on your analysis? [00:02:51] Speaker B: Oh, yes, with pleasure. Because it's interesting that back then when we talked, we didn't have all the data. We were flying blind. The events were unpredictable, and we didn't know what was going to happen. But everybody concluded instantly that Sweden was a failure, and a terrible failure at that. The world's cautionary tale. Now, when we have more data and we know more about what happened, suddenly the world seems to have lost interest in what happened in Sweden because very few have tried. Media, politicians, and so on, have tried to follow up and look at what happened in Sweden. And my conclusion, after having looked at it, is that Sweden was not the place that experimented and came up with some strange new solution to our problem. The rest of the world did. The rest of the world imitated China and tried to lock down entire societies. At the peak, 4.6 billion people were under house arrest while Sweden kept staying open. And of course, there were benefits, like to the economy, to kids who were allowed to go to school, benefits to mental health and so on. But the most interesting thing is that this does not seem to have come at the cost to public health. When you look at total excess deaths, the death rate above the previous trend during the pandemic years, it seems like Sweden actually did better than most, if not all, other rich industrialized societies. Our excess death rate was less than half of what it was in the United States. So it seems like, actually, when you give people freedom, they don't act like crazies. Most of them are rational. They don't want to hurt themselves and their loved ones, and they try to reduce mobility when they can, when it's possible to do that. And that seems to be what Swedes did. [00:04:58] Speaker A: Well, what I thought was interesting and very important for everybody to remember that we weren't, in many cases, flying blind. There was a guidebook, there was previous pandemic planning, and none of them had included recommending lockdowns. If anything, quite the opposite. None of them had recommended mandating. So, you know, the health authorities in Sweden were actually following the science and they managed to keep it. They were a little bit more on the social democrat side, some were a little bit more on the conservative side, but they just kind of really kept their heads down and did the right thing under tremendous pressure. So my estimation of Sweden, sometimes we like to pick arguments with it which really aren't merited when you look at these indices of economic freedom, as you discuss in the book. So in some ways, that, quote, reckless, unprecedented pandemic experiment of lockdowns, border closures, mandates, provide a case study for both of your books. Open the story of human progress and the capitalist manifesto. What lessons have we or should we have learned from these interventions in terms of progress and economic growth? [00:06:44] Speaker B: Yes, you're absolutely right. I mean, for several years now, we've had a progressive left and a populist right, and they all say that we need government control and we need to shut down global capitalism and less free trade and less free movements across movement across borders. And, well, the pandemic was an experiment in anti capitalism and antiglobalization. We shut down the world, we shut down production, we shut down trade. All the flights were grounded. So what was the outcome? Well, a disaster, a complete disaster that reveals that progress is dependent on openness. I mean, most indicators of human living standard has improved sharply in the past few decades, which I write a lot about in my book. But there was a sharp reversal during the pandemic years. In 2000 and 22,021, some 60 million people around the world were thrown back into extreme poverty. Chronic undernourishment sharply increased, as well as all kinds of indicators of social despair around the world. So it's really a case study in what happens when you stop global capitalism from being free. [00:08:06] Speaker A: Now, the takeaway for some, I've heard this repeatedly in the various republican presidential debates, was that the lesson learned was that we need to repatriate supply chains, make our own protective equipment, medicine, et cetera, domestically, as a matter of national security. Why is this the wrong approach? [00:08:29] Speaker B: Yeah, everything seems to be a national security threat nowadays. I heard earlier this week that the republican Florida senator Rick Scott, he warned about an existential threat to us national security that had to be investigated, and that was the import of garlic. That was a serious threat to national security. So I think it tells us that these arguments will always be abused by those who oppose competition and trade for other reasons. But obviously, the main concern for lots of people, and it seemed intuitive, was that in a dangerous world, and when the world suddenly shuts down, it's dangerous to rely on supplies and supply chains that are international by nature, and we should repatriate more things. I understand why people come to that conclusion, but it is the absolute wrong lesson of what happened, because actually, when we study which businesses and countries did best during the pandemic, it turns out counterintuitively to people, because you need to have some economic insights to realize this or lots of data points. Those who did best were the ones who had most complex supply chains, those who relied on many suppliers in many different countries. Sounds strange, but they had invested more in those relationships. They were more used to improvising. They could turn to new places when suddenly a supplier was under lockdown, whereas businesses that only relied on one single supplier and had always done so well when that supplier was under lockdown or the workforce was back home sick, it was game over. They had nowhere to turn to. So this is the reason why the old saying doesn't go, put all your eggs in one basket and protect it with regulations. And tariffs, because then you only have to drop it once and it's over. And as America found out during the pandemic, one of the most serious long term shortages was in baby infant formula. And that had been repatriated. Regulations meant that it was impossible even to import european infant formula to the US. And then all it took was problems in one factory in the spring of 2022. And then suddenly there was a national shortage, and mothers took their cars to Mexico to go there, geographically, physically, to buy it themselves. So I understand why people think this way. It seems intuitive, but it's disastrous. There is a reason why most problems that appear are regional by nature, whether it's war or an epidemic or a natural disaster or what have you, then if you have all the production of everything you need back there, you lack all the necessities precisely at the moment when you need it the most. So trade makes us resilient, not protectionism. [00:11:49] Speaker A: So let's turn to the capitalist manifesto, why the global free market will save the world. You write that, quote, every 20 years, we need a capitalist manifesto that makes the case for economic freedom applied to the problems and conflicts of the present era. That includes how attacks against capitalism have changed. As you observed, quote, 20 years ago, capitalism was wrong because supposedly it made the world's poor poorer. Now it's wrong because it makes the poor richer. Unpack that for us, if you will. [00:12:32] Speaker B: Yeah, it seems confusing, but 20 years ago, when I made the case for global capitalism, most enemies were on the traditional left, socialists who said that, no, I understand why we in the west are in favor of capitalism, because trade and multinational investments and stuff like that, that'll benefit us. But it comes at a price to somebody else. We exploit the rest of the world so the poor will become even poorer in the future. And that's why we need more tariffs and more control of capitalism. And I think that if we have learned anything over the past 20 years, it is that Capitalism is the best friend of the world's poor. Every place that has at least opened up a little bit to global market forces, to foreign investments, to opportunities to trade with the rest of the world, a little bit more secure. Property rights, they've grown tremendously, spectacularly. We've seen that in Bangladesh, we've seen it in Indonesia, in India. Even in places in Latin America and Africa, wherever people get more freedom, they grow tremendously. And that's why we've reduced extreme poverty faster than in any other era in human history. I think people have realized that because it's not because of my books, unfortunately. But sometimes facts speak for themselves. People can see that the world is changing. But when they do, and when Americans and Europeans see this, unfortunately, they still share the same basic misunderstanding that the world economy is a zero sum game. So while they thought that once upon a time, we benefit, somebody else out there have got to lose, now they see that those out there, they gain. So probably we are losing. So then, subtly, this has been intervoved with all the ideas of how we are deindustrializing in the west. We're losing good, decent middle class jobs. So now we need to dismantle capitalism to protect us against the world's poor as they grow richer. And that's often why it's not just the traditional left now that opposes global capitalism. It's the populist nationalist right all over the world as well. [00:14:55] Speaker A: Now, don't discount how many people will be reading your books, especially after Elon Musk plugged your book on x, sending it to the top of Amazon's sales ranking. That's got to be any author's dream. And as you said before, we hopped on. It's important for people to read the books, but it's also important for the right people to read the books. I was particularly pleased that Musk said the book explains how capitalism is not only successful, but morally right. While some may make the consequentialist argument that capitalism is morally right because it benefits the poor. But from an objectivist perspective, we make a more fundamental philosophical argument that capitalism is the only system compatible with the protection of individual rights. What's your take? [00:15:55] Speaker B: My take is that we need to look at the issues from both those perspectives, from the moral and from the practical perspective. And as Ayn Rand would point out, the moral is the practical. In many ways, it's a mistaken divide between somewhat. We can do whatever if the consequences are good, or we have to abide by a specific set of morals, even if the world collapses when we do well, I think if the heavens fall down, then there's probably something wrong with the moral code that led us there. And I don't think that we'll get great consequences if we don't really care about how we act and according to which kinds of moral principles. So we have to look at it from both sides. And I think that I'm trying to do this in this book as well, because capitalism is the moral system, because it's the first one that does not organize the world into rulers and subjects, into oppressors and oppressed some who dictate how others should live their lives, but rather allowing everybody to live according to their own individual reading of the world and of their own interest. So it's the first system that provides each and every one of us with dignity and with individual rights, so that we're not forced to into any kinds of agreements or deals. We only enter into deals if both sides think that they will both be better off after they've done it than not doing it at all. And that's a basic moral case about dignity and about individual rights and individual worth. But it's also the very thing that creates these good outcomes, these great consequences. Because if you can only get rich by enriching others, by providing them with good services, technological capacities, and more opportunities, then you'll work hard to try to achieve that, and to try to come up with something that's better, cheaper or faster tomorrow than you did yesterday. And that's how we create economic growth, that's how we create more dynamic economies, and that's how we solve the traditional scourges of mankind, of poverty, of hunger and despair. So the moral is the practical, and that's what capitalism is about. [00:18:37] Speaker A: So I was pleased that you chose to use the word capitalism as opposed to free markets. But you write that, quote, free market capitalism is not really about capital. It's about handing control of the economy from the top to billions of independent consumers, entrepreneurs and workers, and allowing them to make their own decisions about what they think will improve their lives. Now, while I agree with you, I think that we actually too often discount the role of capital, particularly capital investment. Ein Rand used to emphasize that there is no distribution before production. And I like to make a bit of a counterintuitive argument that there is no production before profit, that every startup, every innovation, every new technology, requires investment which comes from prior profits. And I'm often reminded of this when I go to certain technology conferences, where everybody buys into the premise that economic inequality is a grave problem that must be addressed with redistribution. Yet the same people who are at the conference, either they are seeking venture capital investment for their startups, or they're venture capitalists seeking investment opportunities. So I know one book can't cover all aspects of capitalism, but might the specific role of accumulated and invested capital in driving progress deserve further exploration in the future? [00:20:23] Speaker B: Actually, that's a great point. That's an important point, and this is a very misunderstood one, because there's this idea that capital is just out there, and it's all about how we redistribute it. But capital is something that we create constantly, and it's something that's necessary to create something further in the future. You're right. I probably dealt with that too little in this book. I'm going to have to write a new manifesto. [00:20:55] Speaker A: Well, we could talk about it, because I have a lot of anecdotes from this, because we tend to think of like, oh, they've got so much money. People like Elon Musk. When he started his first venture with his brother, they had a great idea. It was kind of like some Internet business pages. They had a lot of motivation, they had skills, but the one thing they didn't have was capital. And so they shopped it around. They got the capital investment. They had to give up away the lion share of the stakes in their company, their startup, they sold it for, I think, like, $300 million. They got a fraction of that. And I remember that Elon Musk made the mistake, which he now recognizes, of buying a fancy, expensive new McLaren sports car. Right? That's what we tend to think of as profit, as people that make a lot of profit, and this is what they do with their money. He was driving Peter Thiel around, trying to interest him in another investment. They crashed the car. They could have died. Fortunately, they walked away unscathed. I think the lesson he learned was to take the capital, the profits from any sale, and really invest it all into his next startup, retain more of the ownership, sell it, and make a bigger profit. I mean, we have these images that people who are wealthy are just taking these hundreds of millions of dollars, and they are buying yachts and they're buying planes, and maybe they're doing some of that, but the vast majority of their wealth is going into not consumption, but investment. And it's that investment that is driving productivity, and it's productivity that's driving progress. Anyway, I'll get off of my hobby. [00:23:06] Speaker B: Horse, but that's an important hobby horse, I think, because there is this general assumption that capital and wealth, it's all about piles of cash flying around, or possibly in yachts and in sports cars. What do they do out there? Why shouldn't we have that? Why shouldn't we redistribute it? When you look at the wealthiest people on the planet, or at least the wealthiest entrepreneurs and business people who have really done well, most of their capital is in their business. They don't have much cash flying around. Actually, if they lose much on the stock market, they're suddenly very poor. Which both complicates matters for those who say, let's just take that money and put it somewhere else, because then you just destroy production and you ruin the value of the business, and you won't get much to redistribute at all. But the more basic point is that capital is work. It's achievement, it's energy. That's what it's about. And that's how we create more wealth in the future. [00:24:25] Speaker A: Yeah, it's interesting, there's a passage in Atlas Shrugged where Galt is. Know what he would have called the valley? And he said he would have called it Mulligan's Valley, because it was specifically the role of the financial investment that was the lifeblood that seeded all of the other enterprises. So when people talk about, oh, no one needs a billion dollars, no one needs $20 billion or whatever, well, actually, there are people who need it, and those who need it are us, who will benefit from the investments in the future. Elon Musk's in all of the technologies that's going to raise our standard of living. Now, all right, turn to another thing that I really enjoyed in the book. You were talking about Venezuela, which we spend a lot of time focusing on as well, and the evolution of outside praise for socialist experiments. You use it as an example to illustrate the three steps of socialism. Would you walk us through those? [00:25:41] Speaker B: Oh, with pleasure. Because this about. And when you hear about these three steps, you see them everywhere in world history. And unfortunately, right now as well, I actually stole these three steps from Christian Nimitz. You gave credit economic affairs. So I don't want to be like the socialists and just steal from people. I did, and I gave him credit for it. Here are the three steps of socialism. First, there's always the honeymoon, because people see a Hugo Chavez in Venezuela. And what he does is that he takes the capital and redistributes it and puts it into the pockets of his friends and cronies, but also some to the people as well, and lots of social services and stuff. And everybody, especially intellectuals in non socialist countries, think that this is wonderful, this is what you should do everywhere. Look at the amazing results. He doesn't care about capital. He cares about people. So we should all be like that and we should all learn from this experiment. So that's the first step. But then comes the second step after the honeymoon. And that's the excuses phase when things don't go as planned. Because when you start to consume all the wealth and you don't invest in the future and you don't build new wealth for the long term, then suddenly you grow poorer and you don't even invest in oil production anymore, so you don't even get the same amount of oil out of the ground anymore. And then comes the excuses. Oh, yes, it was. Well, you know, there were problems. Sabotage. There were. People weren't loyal. Sorry. Bad weather. Always bad weather in North Korea, never in South Korea. For some reason, american boycotts, even though that appeared in Venezuela of oil in 2019. By then, the economy was already a disaster. The wrong people in charge. He happened to appoint a couple of bureaucrats who weren't that smart, which kind of shows you that it's a bad idea to build a system where few wrong people in charge destroys the whole place. But you get all those excuses. It was good, but it didn't work out for all these reasons. And then we come to step three. And step three is called it was not real socialism, because at this step, it's impossible to deny that it's a complete disaster like Venezuela. It's probably, at least that I know of, the biggest economic disaster in peacetime in any country. Gdp per capita collapsed by some 75%, despite all the revenue from oil and all that stuff. 6 million people fleeing from Venezuela desperately to go somewhere else where they can get food, somewhere else where they get away from the oppression. And then what outsiders say is that that wasn't real socialism. That was some sort of fake state capitalism and corruption, and they just dressed it up as socialism to sell it to naive. So don't come to me and talk about what happened in Venezuela, because that's not what I'm talking about. I'm talking about country X. And then they move on to the next place, where they enter the honeymoon phase. This is what we saw with what people thought of the Soviet Union. And then they moved on to China. Then they moved on to Cuba, then they moved on to Venezuela. All these three steps, and now they're desperately looking for a new place. [00:29:50] Speaker A: So the paradox of these interviews is the more I like the books, and I've read Johann's book twice, the more remiss I am in getting to audience questions. But I don't mean to be hoarding our time here, because there are a lot of questions, particularly one from the chairman of the board of both the Cato Institute and the Atlas Society. Jay Leper is joining us on Zoom. He says, johan, I loved your book. Please comment on the theory that to compete globally, the US needs industrial planning or will be left behind in technology and other industries. [00:30:40] Speaker B: Thank you, Jay. That's an excellent question, because this is all the rage right now. That is dangerous out there in the global economy. So we'd better imitate China and their active industrial policy and heavy handed planning and move capital and workers into certain sectors that we pick and choose. You can look at the problems here in two different ways. One is the empirical part of it. You can always find examples of where politicians have succeeded in getting some subsidies to businesses that kept on growing, expanding and producing something of importance because they subsidize lots of companies in lots of places. Last time I looked, 49 different american states spent heavy subsidies on trying to attract biotech companies from other states in the US. And if only one of them succeeded, that would look like a success. This is what we should do in the future. And that's the argument of all these industrial policy advocates. But you're going to have to look at the 48 states that failed in doing that and just wasted resources by doing that. And the empirical case is just incredible. And there are lots of studies in the footnotes of my book where for every successful example of this kind of planning, you'll find around 100 examples that fail completely because it's difficult, and this is the other case against it. It's difficult to make progress. It's difficult to build great business models. It's difficult to pick a good new revolutionary technology or business model that will be successful in the future. Most people fail even if they are the real experts, even if they are in touch with market and price signals all the time. When you look at great innovations and business models, they're often the result of a very long incremental process of experiments, failures, trial and error, lots of pushback from the market and from investors, and lots of adaptation and failures again. And then you experiment again. It's very difficult. Why would it be that a few people at the top who don't even risk their own money would be better placed to pick the future, best technologies and businesses for the future? I don't know how much trust the audience has in our present set of politicians, but I don't think there is a great argument to be made that they would be more successful in doing that than previous generations of politicians who tried. They will fail as well, the politicians and governments, when they do it. And that's okay, we all fail. Entrepreneurs fail, and innovators fail as well. But the problem is that they fail while also removing all those checks and balances and the feedback from the market that tells them when it's time to abandon a certain failure and move capital and labor elsewhere. That's why we need the market constantly to discipline all the experiments out there. And trying to remove that market discipline is a way of wasting resources, not on creating the future. [00:34:19] Speaker A: Well, in your book, in talking about industrial policy and the arguments in its favor, you actually also dismantle this whole idea of Al Gore having invented the Internet and the government having done that as well. So that's an interesting section for people to read. Let's put that link to the book again throughout all of the threads. And again, the audio version is also excellent. I can highly recommend. We have another question here from John Holt asking capitalism is an economic system. As an economic system depends on trust, right? Honest dealings and everyone benefits. But what happens to the system when bad actors use their wealth to game the system in their favor by subsidizing politicians to pass legislation that is in their interest? [00:35:20] Speaker B: Yeah, what happens is that we ruin this competitive pressure that comes on an open and a free market, and we benefit businesses that do not compete by coming up with the best goods and services, but the best connections with politicians, and we waste lots of resources and we lose productivity. And then everybody blames capitalism and free markets for this failure. So this kind of cronism is incredibly dangerous, I think. And it's very od that. I think there's agreement that cronyism is bad. It's a bad thing that businesses, just because they have more political connections, should get the subsidies and the regulatory capture and the tariff protection and so on. Most people agree with that, but they do that while simultaneously often saying that they are in favor of this heavy handed industrial policy of politicians trying to pick technologies, green technologies, industries that create decent jobs and so on, because that's the very process that creates the opportunity for all those cronies. They are experts not in creating wealth, but in adapting all the documents to the latest fad to used to be tech, and then it moved to green technology, and then it was industry for real jobs, for real men and so on. There's a whole class of fake business men who are better at being lobbyists than actually producing something, and that has to be fought. [00:37:08] Speaker A: All right, I'm going to take another question here from Facebook. Jackson Sixto asks, what do you think of the argument that the capitalist west actually lost the Cold War, seeing how free markets have only become increasingly strangled by growing government power? [00:37:30] Speaker B: Oh, that's depressing. Well, in a way, it was a moment of triumph, obviously, for our ideas. It showed once again that evil and oppression, it's impotent, cannot create anything on its own. And it collapses when it, in the long run, can only rely on guns to stay in charge. And that should have given a tremendous boost to our ideas generally. But the problem was that we didn't really win the Cold War. The communists lost, but everybody didn't really pick up on which kinds of ideas are the right ones. They might have understood that it's a bad thing to completely destroy your economy and implement dictatorships, but not the rest of the ideas. We're still in this process of incremental over regulation and control of our economies, especially in times of crisis. And this is, again, where I think the pandemic is an important, it's important to talk about the pandemic because it reveals that people, lots of people, have this idea that in times of crisis, we really need the government to be there and protect us and be in charge and point us all in the right direction, which shows us that our ideas haven't really won. And the lesson should be obviously the opposite, especially in a world that's unpredictable. We need the real experts to be in charge, those who have local information about their businesses, about how markets are changing, about what they can do, what they can stop doing without creating worse shortages in other places. So, yeah, there's something to that question. Unfortunately, we're going to have to work harder. [00:39:38] Speaker A: Well, also, as you've said before, there are those three stages of socialism, and that goes along with people really not wanting to admit when they've made a mistake. And there was a lot of public intellectuals who were celebrating the Soviet Union. And it's kind of like with COVID and the masks and the lockdowns, there's not been a lot of apologies. There's not been a lot of admitting that this was a mistake. So there isn't actually a lot of resolution. People have just kind of slinked away, which was why it was actually quite refreshing for you in the pages of your book to admit that you got something wrong. In your chapter seven China paper Tiger, you say, quote, I was completely wrong when it came to predictions that China's economic liberalization would presage political liberalization. Tell us, in fact, what actually ended up happening. [00:40:49] Speaker B: Yeah, this was a great mistake on my part and really my greatest disappointment. Over the past two decades or so, I had great hopes that China's economic liberalization and the ensuing rapid growth would unleash a middle class that would begin to demand more freedoms generally. Well, didn't work out so well. On the contrary, we got this dramatic backlash after around 2010 and especially under Xi Jinping. Where he's trying to bring Mao back to life and recentralize politics, the whole country and the economy. So I was wrong there. I think it's important to consider why I got it wrong. And my reading of what happened is, first of all, that nothing is automatic. These trends aren't just predetermined and will just continue. And it's not the natural relationship, or at least it's not an automatic relationship, that wealth will suddenly lead to demands for more freedom. Actually, it can go in reverse. We have free will and we can make a mess out of things. I think what happened was that a few years after the global financial crisis, there were groups in the Chinese Communist Party and especially the propaganda apparatus, the state owned companies, the security forces and the military. They said that, look, liberalization is dangerous, and this economic forces that we have unleashed has made people a bit harder to control because we had this period of bit more opening, more personal freedoms, more media debates and independent minded business people who suddenly began to speak their minds. So something was happening. But the reactionary forces in the Communist Party saw this and thought that this is the moment when we have to push back, otherwise we will be destroyed. And these forces, they actually ganged up on the then general secretary Hu Jintawi, who was weak and told him that we're going to have to go back to centralization and take control of the economy and otherwise we're going to lose power. And obviously this accelerated under Xi Jinping. So in a way, those forces that could have led to more liberalization overall, they were there, but unfortunately the communists saw that too, and they squashed it. [00:43:41] Speaker A: And there is so much kind of political regulation and oversight of companies, whether they are foreign companies or even domestic companies in China. We had the experience of that recently. We do our 365 days of Einrand inspiration calendar, and we're not producing it at vast quantities, so we're trying to find the cheapest option. So we found a reputable firm in China and we were just right on track to start the printing late summer of this year. And we got a message that they said their communist assigned overseer had said that they couldn't print the product even though it was coming to America. So that would not be a great working situation. You also write that contrary to the idea that China is taking all of our manufacturing jobs, you said China is also deindustrializing. What are some of the other misconceptions plaguing the current political discussion about China? [00:45:04] Speaker B: I think the greatest misunderstanding of China is that the economic success over the past three decades that this is somehow the communist parties. It's their doing, which is crazy. If you studied the chinese economy, you realize that all the areas where the chinese communist party really heavily intervened, the state owned businesses and the regions where they kept control of the economy, they are the disaster areas. That's the low productivity and high poverty area of the chinese economy. What worked out was grassroots liberalization, often in secret. Farmers who began to secretly privatize their land because they were tired of starving and starting village companies. And the great achievement of the communist dictator Deng Xiaoping, once upon a time, was not in conceiving of this, not even planning it. It was in being pleasantly surprised when he saw that happening and saying, perhaps we should allow them some more space to do this, because, I mean, I would like to have communism, but if it leads to starvation and poverty, perhaps we should accept some of that. So in those areas, we saw this tremendous growth, and right now, Xi Jinping has reversed this, taking control of the economy. Again, very heavy handed central planning of cheap credit and subsidies going into certain sectors. This is what some, even on the Americas right now, envy and say, we have to do this to compete. But this is a nightmare. They're constantly picking the least productive businesses and making them less productive as they get access to more cheap credit and more subsidies. It's a disaster area right now in the chinese economy because they accumulated these debts just to keep low productivity areas of the economy afloat. And after the global financial crisis, which affected China just as much as it did here, but they tried to paper it over with massive stimulus packages, and it looked great for a while, but now it comes back to haunt them because they just kept destroying capital by building more apartments than they needed and subsidizing these state owned businesses. So China is in a mess right now. Don't imitate that. [00:47:46] Speaker A: Yes, as Ein Rand has observed, you can evade reality, but not evade the consequences of evading reality. Now, folks, Elon Musk cited his favorite chapter with chapter four in defense of the 1%. You hit on something which has always been a sore point for me. It's the idea of successful entrepreneurs feeling that they have to, quote, give something back to society as if they've taken something away. So hallelujah, that you hit that one hard. The same chapter also dismantles the idea that economic inequality somehow harms the health and psychology of those at the lower end of the income scale. What is some of the research that you present in the book that actually turns this nostrum on its head? [00:48:46] Speaker B: Yeah, this is a very popular myth, and there are plenty of books about this with titles like inequality kills and stuff like that, with simple correlations showing, look, more inequality in a country, more social problems and health problems and so on. But when you look at the data, almost all of those problems are related to poverty in those societies. Not inequalities, not the difference between people. It's the fact that some are still very poor, especially in non capitalist societies. But then they do a little trick. They just look at things like life expectancy and health outcomes between the rich and the poor, and they notice that there's a major difference, lots of years of difference in life expectancy. And then they say, look, this is capitalism kills you. Inequality kills you because the rich live 1015 years longer. But when you look at, I mean, it's not a zero sum game, because now in middle class and upper middle class places, it's high status to exercise and think about what you eat, not to smoke and things like that. That's why they don't die earlier. And that's not a serious sum game. It's not that the poor die earlier because the rich and the middle classes live like that. On the contrary, and this is the most interesting thing, if you look at the data, low income earners have better health if they live in cities and areas with many high income earners. They exercise more, they smoke less, and they're less likely to suffer from obesity. And that's interesting because that's the exact opposite of this idea, that living next door to the rich, that's what hurts you mentally and health wise and so on. On the contrary, it seems like those boring habits of the rich and the middle classes tend to trickle down to low income earners when they live close by. So I somewhat thinking of writing a book called inequality saves lives or something like that. I love it would be fun. [00:51:07] Speaker A: I love it. You could include the capital thing in there as well, because the more inequality there is, the more there is a huge accumulation of profit, of capital, the more investment goes into new startups and inventions that are going to find ways to lower prices and improve products and bring new things into the world. All right, we have. [00:51:33] Speaker B: That's a great way of offending everyone with just one book title, capital and inequality in praise. [00:51:41] Speaker A: Well, you know, you got to keep pushing the envelope. You did the capitalist manifesto. You're getting positive reviews. That Overton window. We need to keep going. We have about eight minutes left. I'm going to take a couple of more audience questions, but then I'm going to hand it over to you for anything else that you want to say or things that you may have learned. In the process of writing this book. On X, Mark Callahan asks, what is the capitalist perspective on the poorest southern border? Are borders even acceptable under capitalism? [00:52:22] Speaker B: Yeah, that's a great question because we don't have borders between american states, do we? Even though they're. And that's one of the best thing about America, because it allows people to move to places where they have greater opportunities, and it makes it possible for employers there to find the workers and the talent that they need. I happen to think that immigration generally is one of the greatest way of constantly rejuvenating your society with new energy, talent, and ambition. And there's a reason why immigrants are heavily overrepresented among Nobel laureates and startup funders and top AI researchers and so on. But that's not a response to what to do about the southern border. I've learned that people really don't like immigration when it's chaotic and when it seems like it's just waves of people running across the border, and that risks hurting all kinds of migration as well. So to me, what's going on at the southern border is a great case for immigration reform to make it easy and safe and legal to enter America if you want to go there, or to Sweden, by the way, if you want to go there, to improve your life by working hard and becoming a part of the american dream. If we found safe and legal ways of doing that, people wouldn't risk their lives to cross borders and oceans. I don't think. [00:54:08] Speaker A: I think also being sensitive to what people's concerns are about immigration, not, this is the argument that Eric Kaufman made in his book White Shift. And we had him in this space, another one of those books that I read twice that he said, when you completely shut down people, being able to express that, whoa, that looks like anarchy at the border. And I'm not comfortable with this pace of immigration. It seems like it's way faster than it was in years past. When those concerns are squelched and kind of not allowed in polite society and called racist or xenophobic, then that is what is helping to drive a lot of populist policies, which are a wild card. They have all different kinds of unintended consequences. So being able to have a discussion, make a case for more open immigration or make a case for more modulated immigration, being able to have that debate without accusations of white supremacy is probably the way to go. All right, so here we are coming to the top of the hour very late there in Sweden. I remember I recently interviewed Jonah Goldberg, who shared some advice that he received from Charles Murray, who said that if you set out to write a serious book and it doesn't change your mind on at least half a dozen issues then, or at least that you're not surprised by then, maybe you're doing it wrong. So what, if anything, were the biggest surprises to you in the course of doing the research and the writing of this book? [00:56:20] Speaker B: That's such a great question. And of course, it's boring to write something if you're not at least a little bit surprised by something. I was surprised by lots of things. But if I were to give a brief answer, one important thing that surprised me was that when you look at lots of the indicators of restructuring, turnover, churn on the labor market and so on, those indicators were higher in the 1950s and 60s than they are today. We tend to think that we live in such a rapidly changing world and lots of restructuring and people losing jobs and they have to find new ones. Yeah, but there was much more of that in the 1950s and many more manufacturing jobs lost in the US rust belt back then than in the past 2030 years. So that was a bit of a surprise to me. But if I have the time to mention just one more thing, because we've talked a lot about problems and how capitalism in many ways is very unpopular, one thing that surprised me is that it keeps on delivering, even under the harshest circumstances. I was prepared, when I started to write this book, to write more about lasting effects of COVID and the shutdown of societies and so on. The amazing thing is that it took us two years, and that's too long, should go faster. But two years and suddenly we're back to the lowest level of extreme poverty in the world that we've ever seen in human history. It seems like, as Henry David Thoreau said 150 years ago, that business and commerce seems like they're made of rubber because they bounce over all the obstacles that legislators put in their way. And there is some of that. I was pleasantly surprised to see how entrepreneurs and businesses keep on innovating our way out of almost every crisis. [00:58:23] Speaker A: Yes, in the non sweden world, in the rest of the insane way that people handled this pandemic outside of Sweden, it's good to see that there is a resilience with the cautionary note that, as you have argued throughout the book, none of this is automatic. And we really do need to be mindful of the roots of prosperity and continue to fight for them and guard our values. So, Johan, again, midnight over there. This is a guy who never sleeps. It was just really wonderful to have you back on and hopefully get to see you next time you're back in the States and maybe even get you as a speaker for our summer conference. So thank you so much. [00:59:17] Speaker B: Thank you for having me back on the show. Pleasure was all mine. [00:59:22] Speaker A: And thanks to all of you who watched, asked so many great questions. Again, sorry I kind of hogged the interview, but it's one of those books that I will probably be rereading for many years to come. If you enjoyed this interview, if you enjoy the kind of programming that we put out at the Atlas Society, it's about two weeks till the end of the year, so now might be a good time to make your first ever donation to the Atlas Society. All new donations will be matched by our board. So thank you in advance for your consideration and be sure to join us next week. This has been like reunion month for us at the Atlas Society because we've now been doing this for quite a while. And I'm calling back my absolute favorite authors, one of whom is joining us next week. Greg Lukianov is going to be talking to us about his new book, the Canceling of the American Mind. We'll see you then.

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