Episode Transcript
[00:00:00] Speaker A: Hello everyone, and welcome to the 212th episode of the Atlas Society asks. My name is Jennifer Anju Grossman. I am the CEO of the Atlas Society. We are the leading nonprofit organization introducing young people to the ideas of Ayn Rand in a lot of fun, creative ways, including music videos, graphic novels, AI, animated book trailers. Today we are joined by Samuel Greg. Before I even begin to introduce our guest, I want to remind all of you watching us on Instagram, Twitter, Facebook, LinkedIn, or YouTube, you can use the comment section to type in your questions. We will get to as many of them as we can. Samuel Gregg is author of 16 books, including on ordered Liberty, Reason, Faith, and the struggle for western civilization, the Essential Natural Law, and most recently, the American the Next American Economy, Nation State, and markets in an uncertain world. He earned his doctorate in moral philosophy and political economy from Oxford University and has authored dozens of academic papers and opinion editorials as well. He's the director of research at the Acton Institute, and he serves as the Friedrich Hayek Chair in Economics and Economic history at the American Institute for Economic Research. Sam thanks again for joining us.
[00:01:28] Speaker B: Jack, it's great to be with you, and welcome to all the listeners and viewers.
[00:01:32] Speaker A: So first, an apology. I have woefully abbreviated your academic and professional background. To have done it justice would have been eating far too much into our interview time. But let's roll back before your studies and career began. Where did you grow up? And do you credit any early experience, experiences, or mentors for seeding your later professional trajectory?
[00:01:58] Speaker B: Well, thanks for that introduction and invitation to indulge myself in biography or autobiography. So, as you may have guessed by my my accent, I'm not from the United States. I was actually born in Tasmania, Australia, and I grew up there. I went to the University of Melbourne to do my undergraduate study, and I went to the university of Oxford to do, as you mentioned, my DPhil, which is the Oxford term for doctorate in moral philosophy and political economy.
So I was very influenced there by my supervisor, Professor John Finnis, who is probably well known in anyone, any circle that studies natural law. Some people would argue he's one of the foremost natural law scholars in the world.
But my focus was very much upon natural law, coming from, I guess you might call, a type of aristotelian thomistic approach and its relationship to political economy. And while I was at Oxford, I had the time and the luxury of being able to study books such as Adam Smith's wealth of nations and pretty much everything that fa Hayek ever wrote. So that gave me an appreciation for both free market economics, but also the normative dimension of the free society and what it means to live in an economy in which entrepreneurship, dynamic trade, market exchange and commerce are the normal ways in which people pursue economic growth, but also all sorts of different types of goods that we often don't associate with the growth of markets, particularly virtues, commercial virtues, classical virtues, etcetera. So those are some of the main influences upon my thought. And I've always found the intersection and the interrelationship between moral philosophy and political economy to be particularly instructive. Because, as I'm sure you know, Jag, modern economics, at least as we understand it, really emerged out of philosophy, particularly during the scottish enlightenment, but even before that, with different scholars who are inquiring into moral questions, ethical questions, and found themselves having to grapple with the insights provided by economics or ways of thinking about the economy that were not particularly common and didn't start to assume prominence until, really, Adam Smith's wealth of Nation was published. Wealth of nations was published in 1776.
And since then, I've really gone back and forth in exploring the relationship between these types of things. And that's an older way, I suppose, of doing political economy. That way of doing political economy was quite normal for long periods of time, until, I suppose, economics became heavily dominated by mathematics and econometrics. But I also believe that it's very important not just to focus upon trying to persuade academic audiences and scholarly audiences and intellectual audiences, that the case for markets, mostly economic and the normative case. I think it's also very important to try and persuade wider numbers of people who are interested in these ideas, but don't have the luxury of people like you and I who have jobs that give us the opportunity to explore these things in much more detail.
[00:05:40] Speaker A: So, Australia, I guess, in my naivete, I had thought that you were from England, but I just had the opportunity to go and spend about a week in Australia.
I was there visiting Gina Reinhardt, of course, she's the mining magnet, and she's going to be our honoree at our gala coming up in Washington, DC in a couple of weeks. So, had a question for you. Obviously, we just celebrated Independence Day. You tweeted that you were celebrating your 24th, 4 July in America and your 15th as an American. There's a particularly intense love of America that can come from those, to paraphrase Ayn Rand, who are citizens by choice rather than by accident of birth. Given your nearly quarter century living in America, what have been the biggest changes.
[00:06:42] Speaker B: That you've observed well, I first moved to the United States in February 2001, and it's obvious that America changed very radically about eight months later with September 11. And that wasn't just obviously in terms of dealing with threats and problems from abroad. It also had major implications for the role of government in american society. Now, when you add to that the financial crisis that took place in 2008 and which rolled on for really a year throughout the world's economies, that produced not just political changes, but it also produced some significant economic changes, particularly in the place of free markets in the United States and the role of government in the economy. I think it's fair to say that from the late 1970s onwards, free markets certainly pushed back and achieved some type of presence in public policy debate and discussion, and even legislation that had not existed in the United States for a long period of time. But one of the things I've noticed the most over the past 25 years, particularly since 2008, and even more particularly, I suppose, since 2012, has been this gradual corrosion of confidence in markets, belief in the benefits of commercial society, and a preference for economic freedom throughout the United States, and a slippage away from those things towards faith in the state, faith in the capacity of government to provide economic goods and services in many sectors of the economy, that it is argued it does in a better, more efficient way, that also happens to accord with particular norms that many people think are important.
And that's just not something we've seen on the left. We haven't just seen a shift away from, say, Bill Clinton, who in retrospect appears relatively pro market, compared, for example, to President Joe Biden or Barack Obama. We've also seen a shift away from the commitment to markets that was obviously very present during the presidency of Ronald Reagan and the whole Reagan revolution, towards much more skepticism about markets on the political right. And that's not just associated with the thought and the ideas and language and rhetoric of someone like Donald Trump. Across the right as a whole, we've seen significant movement away from what I think was often an assumed commitment to free markets over interventionism, and a willingness on many people on the part of a right to entertain at least the possibility of using more extensive government intervention to achieve not just economic goals, but also any number of social goals that they think are important for the United States as a country. So just on the level of economic thought, economic culture, and economic ideas and policy, we have seen some major changes in the United States over the past 25 years that, in my view, are going to be very hard and difficult, or be not impossible to roll back.
[00:10:13] Speaker A: So we're going to talk a little bit about some of the events and forces that led up to this strange convergence of protectionism on the left and on the right. But we're getting a lot of audience questions in, so I'm going to weave a few of those in in as we are continuing one from YouTube, Kingfisher 21 asks, why is philosophy no longer taught in tandem with economics? Does it have to do with making economics a science?
[00:10:45] Speaker B: Well, that's a great question that involves a historical and methodological answer. So if you had been studying what we call economics in the 18th century, you probably would have been sitting in a moral philosophy class or a class on jurisprudence.
That's how what we call economics today, or at least the rudiments of economics, was taught for a very long period of time. In fact, it was often in jurisprudence classes. It was taught under the rubric of what was called the police power, which sounds very daunting. But what it was really about was the role of the state when it came to not just things like law and order, but the implications for economic life as well. Now the shift starts to happen as more and more scholars take Adam Smith's starting point in the wealth of nations and start to think about what we would call economics today in a way that was certainly distinct from questions of moral philosophy. And that separation accelerated through the 19th century and into the 20th century, particularly as economists sought to present economics as what you might call a social science or a social science, which by definition, had a very positivistic concern to it, insofar it was concerned with what is rather than what should be or what ought to be. And in many respects, of course, that sharpened the analytical lens of economics, but it also meant that economics became more and more separated from questions of moral philosophy, let alone political philosophy. Now, the separation was never absolute, because underlying economics are some, I guess you call, like normative commitments, such as a commitment to knowing truth, a commitment to understanding facts, so that policymakers and others can make good decisions that have not just economic, but also normative consequences as well. So I think those are some of the reasons why economics started. Has, has for a long time now been considered quite separately. And also, I think, after the second world war, the move towards a lot of economics in the direction of econometrics and the heavy mathematization of the discipline further increased the difference in the distance between moral philosophy on the one hand and economics on the other. Now, a lot depends, of course, what type of economist you're talking about.
Someone like John Maynard Keynes had very clear normative goals in mind when he was rewriting rethinking economics in the 1930s. It's also clear that scholars like Fa Hayek and Adam Smith as well, clearly had some normative commitments working in the background, in their case, commitments to liberty and personal responsibility in what you might call the flourishing of a commercial society.
But I often think that some of the best discussions occur in that intersection between moral philosophy on the one hand and economics on the other. That's certainly been my experience.
But I do think there's a case to be made for keeping the two things separate so that they're in a type of creative tension with one another.
So if you're working in the field of economics, I would recommend that you pick up some basic philosophy, because I think that will give you an insight into how many people think about the world. But I also think philosophers would do themselves a favor by learning a little bit of economics, because I think that that would temper and inform many of their, much of their commentary on any number of questions.
[00:14:30] Speaker A: Well, for all of the students of economics out there who are looking for a little bit of philosophy, obviously, you know our bias here at the Atlas Society and highly encourage you to pick up some of our resources on objectivism. All right, another question from YouTube. Alan Turner. What would you say to people who argue that Marxism and a socialized economy is more scientific than following the whims of the free market?
[00:15:00] Speaker B: Well, I have a lot of things to say, as I'm sure you would, Jag. Let me just start by saying that one of the things about Marxism is that Marx did see himself as a type of scientist. Marx did see himself in engaging in a type of intellectual enterprise that was based upon empirical observation and study of the world around here. So I think it's fair to say that the claims of Marxism to be a type of science and social science, scientists, social science, do go back to Marx himself, because he certainly understood himself as working along those lines. He was trying to discover what he thought was a scientific or a social scientific explanation for the way that history worked. So I think that's the basic reason. And if you look at most marxist thought, there is this essential commitment, at least on their part, to what they understand to be science, a science of history, the workings of history, the dialectics of history, and the implications of this for the economy and how changes in the, the economic composition and basis of society lead to changes at the social level, or what Marxists would, would call the superstructure of society. Right. So you've got the underlying economic structure, and then everything else they argue is informed by what's going on in the dialectics of history and the way that the economy is developing over time. So, yes, they have a scientific basis in the sense that they do believe that this is the case. But I think what one, of course, has to challenge is the adequacy of that ostensibly scientific account of economic life and history to show that, in fact, that many of Marx's arguments and many of the arguments of Marx's thinkers on these areas are quite flawed. Think, for example, of the labor theory of value, which is very intrinsic to many forms of marxist discourse. It purports to be a type of scientific explanation of how value is created. And yet we know, thanks to the researchers or people like Karl Menger and lots of other economists following him and others, that that simply doesn't work out. It's just not true. It's just, it's refutable on what you might call social scientific grounds. So those are the responses I think one can make to Marxists when it comes to these types of arguments that, okay, you accept that they're trying to advance a scientific explanation of the world, but that scientific explanation of the whole turns out to be not particularly scientific.
[00:17:59] Speaker A: Right? Of course, with science, you have to have experiments, and then you have to have results, and then you have to accept the results and move forward. And that just seems to be one thing that they are not willing to except the results of the many experiments with communism around the world. So back to your book. We frequently talk about our times as the most politically polarized, but when it comes to free trade and laissez faire economics, you argue that with the rise of populism at home and abroad, conservatives are now advocating positions on trade and industrial policy, once embraced by. By the Elizabeth Warrens and Bernie Sanders of the world. How did we get here?
[00:18:46] Speaker B: Well, I think the first thing to note, as I'm sure you know, jag trade and debates about trade have been at the forefront of a lot of american political debate. Right from the beginning of the founding in the 19th century, debates about trade and trade policy were, I would argue, after the topic of slavery, the issues about trade, free trade versus protectionism, were among the most charged political issues facing the United States. It's worth remembering that in the antebellum and postbellum America of the 19th century, the Democrats, the Democratic Party, were the. Was the party of free trade, and the Republican Party became the party of tariffs, especially after the civil war. So what we're seeing in some respects. My point is this is we're seeing a resurgence, a return of debates that for a time after the Second World War were generally seen as being settled in favor of free trade. Now, there were outbreaks after World War two of pressures to change american trade policy back in a more protectionist direction. Think, for example, Pat Buchanan. Pat Buchanan, one of the most prolific and public conservative intellectuals in the United States, was very much an advocate of protectionist policy, so much so that it enabled him to run for president in 1992 and do enormous damage to George HW Bush's reelection efforts. Or think, for example, of the insurgency of Ross Perot in 1992 and 1996, where he's arguing very explicitly in favor of protectionism and against trade liberalization.
So those undercurrents have always been there. They've never quite gone away. But what I think has given it extra legs in more recent years are, first of all, the rise of China and the claim that the only way we can deal with what I think, I actually think is a geopolitical threat to the United States, the only way we can deal with this on an economic level is to play the same protectionist game that America has played in the past. And then, of course, there are arguments about what trade liberalization has done, done to manufacturing that has a lot of credence and a lot of traction with people on the left, but also a lot of conservatives. And what they believe has happened to manufacturing in the United States is a consequence of trade liberalization. Now, I happen to think those arguments are badly flawed. I think they're diagnosis of what has happened to manufacturing is flawed. I think there are arguments about why they think protectionism would somehow change America back to a type of 1970s manufacturing, or at least give manufacturing a more prominent place in the american economy. I think those arguments are flawed. I also think that arguments, their arguments about what manufacturing has done, to, quote unquote, fly over country, I think they're also wrong.
But there's no question that arguments about manufacturing, arguments that, as I say, I think are false, has shifted a lot of conservative opinion away from free trade and in favor of protectionism.
[00:22:23] Speaker A: So you argue that the financial crisis of 2008 marked the end of a nearly 40 year consensus about the benefits of a more liberalized economy and international order. While the causes of that crisis remain in dispute, I'd like to get you on the record, get your perspective on what contributed to it. Too little regulation or bad monetary policy?
[00:22:48] Speaker B: Bad monetary policy and too much regulation. I would argue so. I think if you look at the policy that was followed by the Fed under Greenspan, and then eventually by Bernanke. From 2000 up until 2008 was one of loose monetary policy. There was a lot of easy monies surging its way throughout the economy, partly in response to the 2001 recession, partly in response to 911, etcetera. And some of that money, when you have a lot of extra money surging through the economy, a lot of it's bound to go and be invested in bad places, particularly when you're incentivized to. To lend money, as Americans were, when you're incentivized, and banks are incentivized to lend money to people who don't have particularly good credit records, which was especially when it comes to mortgages and the housing industry. So that's some of the causes of the financial crisis, right? I would argue that loose monetary policy plus explicit policies mandating that banks lend a lot of money to people who they would not have otherwise lent money to in pursuit of trying to encourage home ownership, etcetera. I think those were some of the major reasons driving the financial crisis. I also think that a long term problem, which is a problem of failing to deal with the issue of moral hazardous, also caught up with us in that particular period of time. And as you know, Jag, moral hazard is when you incentivize people to make, to take risks that they otherwise wouldn't make because they believe, or they have strong reason to believe, that they will be bailed out if the deal goes bad. And it's very clear that much of Wall street was operating upon that assumption between 2001 and 2008. And they had good reason to because that's what had happened in the past. So did bad behavior on the part of banks contribute to the financial crisis? Well, maybe at the margins, but I think it's fair to say that a lot of the banking behavior that helped contribute to the financial crisis was a direct result of this problem of moral hazard, which even today I don't think we're really faced up to, because I think we're engaging in the same type of behavior today as we did back in 2008.
[00:25:24] Speaker A: All right, let's grab some other questions from the audience. On YouTube. Lockstock and barrel asks, is there a distinction that needs to be made between being pro open borders when it comes to goods or coming across, or open borders when it comes to people? Unrestricted immigration seems damaging to a market. Love to get your thoughts on that.
[00:25:49] Speaker B: Well, I always, whenever I'm asked about immigration, I always preface by saying, I am an immigrant to the United States. And I can tell you that the process of becoming a citizen, as I did in 2008, so seven years after I moved to the United States, was incredibly bureaucratic, difficult, costly, etcetera. And I don't regret it at all, obviously. But going through the legal process of migration to the United States is a bureaucratic nightmare, and it shouldn't be. So I happen to believe that governments do have a responsibility and the right to admit who they want to the country that people want to be moving to, America's not obliged to take anyone that wants to come to the United States. I do think that migration, net migration, is generally a net boon to the United States economy. I note things, for example, and I explained in my book, that immigration to the United States has results in things like disproportionate number of migrants are entrepreneurs. They start businesses that are far faster rate than native born Americans. Many of them are coming to the United States because they want to get away from egregious interventionists and in some cases outright socialist economies. And they want to get away from those types of arrangements. And they have no interest in replicating those arrangements in the United States. So I think there's all sorts of good reasons why we should favor anyone who favors free markets and capitalism and economic dynamism should favor immigration.
But I also think that if we live in a world of sovereign nation states, and one of the things about sovereignty is borders and countries are entitled to ask whether people coming into the country are coming into the country with the expectation that they are going to contribute, they're going to be entrepreneurial and creative, and they're not coming for welfare, they're not coming for handouts, they're not coming to try and replicate the situations that exist in their own countries. I also think that one of the problems we have with immigration at the moment is it's a type of rule of law problem as well, because you may disagree with many of the immigration laws of the United States, and I have my own criticisms of them, but rule of law is essential for any civilized economy and for any dynamic market economy. And so to that extent, I think we certainly need to revisit our immigration laws. I think we may need to make it easier for people to come here, but they need to come here legal. And it's the illegality, I think, that is causing us many particular problems. And as Milton Friedman said so eloquently, we also need to make it very clear that immigration to the United States or any country in general should mean that you do not and cannot access the welfare system. I think it was Friedman who said that you can't have a big welfare state in immigration. At the same time, they make both things become highly dysfunctional or even more dysfunctional in the case of the welfare state, when those two things are paired up. So I talk about this in the book because I think it's an important subject that those of us who favor markets need to think through very carefully. Carefully, because it's obviously on many people's minds right now.
[00:29:25] Speaker A: Absolutely. So also, in your chapter, in your book on protectionism, it kind of reminded me of Bastiat's essay, what is seen? What is not seen? People see the promise of jobs supposedly saved by terrorists, but they don't see the jobs lost. So what are some of examples of those consequences across recent administrations?
[00:29:52] Speaker B: Well, by recent administrations, we're, of course, talking about the Trump and Biden administration. So let's go back to the the Trump administration. So you'll remember, of course, that Donald Trump comes to office self proclaimed tariff man.
He's not the first self proclaimed tariff man in american presidential history. McKinley was, also had that title, claim title.
But what did they, what did they do? They Trump administration imposed tariffs upon steel and aluminium imports into the United States. And this was clearly aimed at China. Trump administration was very clear about that. They made it very clear that this was the objective. They were trying to change what they believed, in many cases, rightly, to be bad behavior on the part of China when it comes to trade and any other, any other number of economic practices.
But as the president's own economic report stated a year later, the tariffs didn't work. They didn't work. They didn't change China's behavior. They also resulted in retaliatory action on the part of China against american farmers, but also retaliatory action coming from us allies, whether in the European Union or countries like Turkey or countries like Canada and Mexico that are right on our borders. So the cost of that was, first of all, paying all these subsidies to american farmers in order to compensate them from the damage coming from chinese tariffs, which had been provoked by american tariffs. But it also resulted in nothing saving or preserving the types of jobs anywhere near the scale that the Trump administration promised. So the Trump tariffs, quote, unquote, saved around about six to 7000 jobs in the aluminum and steel production industries.
What was not mentioned was that those same tariffs cost something like 70,000 jobs, those industries that use things like aluminum and steel products. So in other words, the costs of the tariffs were passed on to the users of steel and aluminium products, who then, of course, passed them on to consumers, and who, of course, reduced their own employment so that they could make sure that they were able to keep selling their goods at a competitive price to americana consumers. That's the type of multiple level of dysfunctionality that's introduced by tariffs into any economy where the government adopts those types of policies, they end up hurting the country that adopts them as much as, if not more than, the country or countries tariffs are directed against.
[00:32:49] Speaker A: Well, and also, I think those tariffs might have been aimed at China, but as I just learned in my recent visit to Australia, the steel that is made in China is coming from ore that is mined in Australia. So how much did we actually hurt an ally in the process of trying to punish an adversary? So we talked about the Trump tariffs. What are some examples from the Obama administration?
[00:33:20] Speaker B: Well, the Obama administration played the same game when it came to solar panels, if you can believe it. Solar panels. Right. Because China was trying to establish a dominance in the solar panel industry throughout the world.
They adopted and placed tariffs upon solar panels and the production of materials that went into the production of solar panels that was coming from the United States.
So the Trump Obama administration responded by slapping tariffs on any number of chinese imports, especially when it came to things like rubber and tires and also solar panels as well. Again, it didn't change the behavior of China.
It didn't result in american solar panel manufacturers being able to compete out compete chinese solar panel manufacturers.
Now, what it did produce on the part of China was a surplus of solar panels.
It produced in China a dependence upon subsidies and tariffs to keep the solar panel industry going. But the Obama administration's policies in this regard, when it came to protectionism being directed against China on solar panels, really didn't change the situation. It didn't rectify what was perceived to be a problem.
And in fact, in many respects, I think it ended up hurting solar panel manufacturers in the United States and it didn't improve the situation in terms of the trade relationship with China. So again, this is another example of protectionism being deeply counterproductive and not producing the types of policy changes on the part of foreign governments that those imposing tariffs are trying to achieve.
[00:35:18] Speaker A: So a previous guest on this show was the ambassador, Gordon Sondland. He was Trump's ambassador to the European Union. And he made the argument that, well, Europe has all of these tariffs and they're protecting their wine and their cheese and their this, and they're that, you know, we are, we're just trying to use tariffs to pressure other countries to open up their markets. So what do you think about these so called retaliatory tariffs and tactics?
[00:35:54] Speaker B: Well, Jag, as I'm sure you know, when Adam Smith was writing about tariffs and protectionism in the late 18th century, he listed the possibility of using tariffs to try and persuade foreign countries to abandon their own tariffs or to abandon their own mercantilist and restrictive practices.
Well, we know that certainly in the case of China, that has nothing worked. There's little evidence that it has worked in the case of Europe or any other number of countries with whom the United States engages in extensive trade. But it also skips over another important point that Adam Smith also made in the world of nations because he said that, okay, maybe it's the case that you want to try and employ tariffs as a way of, of persuading other countries to embrace more open trade policies. But he pointed out that design of tariffs, like the design of tariffs, whether it's for retaliatory purposes or whether it's for outright protectionist purposes, is always going to be influenced and shaped by lobby groups and parties who are not disinterested parties, including the legislators and governments that are engaged in designing the shape and form and direction, scale and scope of the tariffs that are being employed in a retaliatory fashion. So in other words, retaliatory tariffs, leaving aside the fact that they're ineffective in terms of achieving their objective, they are just as subject to the same type of mercantilist impulses, or what we might call crony impulses as any other type of tariff. So I think in the end, I understand why people see this as a strategy in trying to get people to change their behavior. But we also need to look at the record of tariffs in achieving those types of changes, and it has a very poor record in doing so. Moreover, it fosters the type of cronyism that's always associated with these types of interventions by the government into the economy.
[00:38:21] Speaker A: All right, we are getting some great questions from the audience. Guardiangamer asks, during the lockdowns, many ppes had to be outsourced from China. Was this a natural result of different countries specializing, or was there another reason why american industry couldn't meet the demand?
[00:38:41] Speaker B: Well, I guess I would say this, that when it comes to this, the general impact of the pandemic upon global supply chains, which is really underlying the question that's being asked, is it the case that in an era of economic globalization that we become excessively dependent upon international, which can easily break down, whether it's a consequence of pandemics, war, terrorist actions, et cetera. So that's an argument that you often hear from economic nationalists across the political spectrum. We don't want to be dependent upon foreign countries for certain goods. Remember the fuss that was made about baby formula, for example? We were told, well, you know, in many cases, this has resulted in a dependence upon foreign baby formula, has resulted in shortages in the United States because we can't, because we've become too dependent upon exports, imports of such things from abroad. Well, it turns out in that case that the reason there were baby formula shortages is because there are actual restrictions upon baby formula imports into the United States that are imposed by the federal government. And there's only a small number of companies in the United States that are allowed to produce baby formula in the United States. So that's an example of where the real problem was not about supply chains, it was actually about us government policy. Second thing I would say is that even when it's the case that supply chains can become disrupted, one of the things we also learned in the pandemic is how quickly american businesses were able to retool, to start producing all sorts of things very, very quickly that they'd hitherto relied upon for some dimension of their production from abroad. And one of the reasons we were able to do that is that in terms of international competitiveness, we are still pretty good, at least compared to other countries. So that enabled a lot of businesses to have the flexibility and the capacity to switch up what they were doing very, very quickly, moving from manufacturing furniture to manufacturing other types of things that became more necessary in the United States during the pandemic. The other thing I would say is that there have been some good studies that have come out since the pandemic illustrating that supply chance chain re shoring really doesn't do very much in terms of restoring and or creating more resilience in the supply chain of any number of products that are coming. In some respects, different parts or different components are coming from outside the country. Because when there's a worldwide shutdown of something or when there's a worldwide crisis, domestic industries are just as affected as international supply chains. So domestic supply chains, domestic industries, global corporations, global supply chains, they're all affected in the same way by these different types of problems. So it's not clear to me that arguing for the argument that we have more resilience when we reduce our reliance upon international supply chains holds much water, empirically or historically, all right.
[00:42:03] Speaker A: Another question from Kingfisher 21 asking, do you think mercantilism might see a resurgence if inflation begins to rise and inflation begins to rise and people, countries panic and try to hoard gold?
[00:42:21] Speaker B: Well, one of the things, as you know, jag about mercantilism is that mercantilists were particularly focused upon precious metals, gold and silver, and they had a view of the world whereby wealth consisted very much in how much you possessed in terms of precious metals, gold and silver. That was a standard doctrine of mercantilist thought. And it was challenged by people like Adam Smith, who pointed out that wealth is not so much about the possession of precious metals. Wealth is your capacity to satisfy your wants and needs relative to the wants and needs of other people. That's the classic definition of wealth. So to the extent that mercantilist policies encourage us to think about precious metals in the way that mercantilist policies and doctrines did in the 17th, 18th, and even into the 19th century did, then I can certainly see some type of link in terms of us becoming more attached to precious metals. But I think the broader problem with mercantilist policies, at least for our current situation, is that because mercantilist policies generally introduce inefficiencies and a lack of competitiveness into those countries that adopt such policies, the temptation will arise for central banks to try and spurt economic growth, not through relying upon the market and competition to produce more productivity, but rather upon injecting fiscal and monetary stimulus into the economy, which, of course, as we've discovered in more recent years, tends to lead to inflationary outbreaks. So that's the connection I would see between the adoption of neo mercantilist policies today and the potential for inflationary outbreaks in present and in the future.
[00:44:22] Speaker A: Interesting question from one of our regulars. Candice Morena asks, do you think free markets are more likely to flourish in smaller countries in comparison to huge countries like the United States?
[00:44:35] Speaker B: That is a good question, actually. So here's what I would say. First of all, I would say that small countries or countries that are physically isolated from easy access, geographically easy access to other countries, they tend to be more inclined towards a favorable view of trade, because small countries have even fewer resources to be able to entertain the illusion of self sufficiency or autarky or even some type of neo mercantilist arrangement. They just don't have anywhere near the type of natural resources or population base or variety of skills, etcetera, that a very large country like the United States has. As for countries that are physically isolated from the rest of the world, like my native Australia or countries like, say, New Zealand.
They don't really have much choice because they really need access to global markets if they're going to get what they need. And they need it at a relatively cheap price to make up for the high cost of shipping imports into their particular countries. So to that extent, I think they tend to be more favorably inclined towards free trade and market orientated policies. That doesn't mean they haven't adopted protectionist policies in the past.
The power of bad ideas is not always nullified by size of country or physical isolation of country. But none of that means that the United States should go down a sort of neo mercantilist path. It's true that America can probably entertain neo mercantilist illusions for, say, a longer period of time than, say, I don't know, Liechtenstein or Switzerland or any number of small countries. But sooner or later, the dysfunctionalities of neo mercantilist, protectionist, interventionist policies catch up with a country, no matter how big. And we've seen that at different points of american history.
[00:46:40] Speaker A: Well, as Ayn Rand said, you can evade reality, but you cannot evade the consequences of evading reality. So it does catch up with you.
All right, another topic you covered in your book was entrepreneurship in America. How do we measure entrepreneurship, and what are some of the trends?
[00:47:02] Speaker B: Well, there are measurements of entrepreneurship out there produced by institutions like the Kaufman foundation, which attract levels of entrepreneurship throughout the United States and abroad. And so we can certainly make comparisons of levels of entrepreneurship in the United States compared to other countries. And the good news is that America remains the number one country in the world for entrepreneurship. Now, that doesn't mean that entrepreneurship is necessarily flourishing in every part of the United States, but it does mean that we're doing better, or maybe less worse than other countries in the area of entrepreneurship compared to other countries. So I'd look at some of the things that the Coffman foundation has put out over the years on this very important subject. And I don't think we should be too surprised, though, about entrepreneurship and its persistence in America, despite the disincentives to be entrepreneurial in America. America. One of the first things that Alexis de Tocqueville noticed when he came to the United States in the 1830s was he said something like, everyone is an entrepreneur. Americans have always had this entrepreneurial instinct, and Americans have always admired entrepreneurs for the most part. Even some people on the left will say things today that they admire entrepreneurs. They like the way in which entrepreneurs challenge the status quo quo, etcetera. So I think in America, there's a cultural disposition in favor of entrepreneurship. And as we talked about before, it's particularly manifest among migrants who come to the United States. Many of them come and they start businesses. They take risks at a high, higher level than native born Americans. Now, that said, entrepreneurship in America suffers from all the types of disincentives that are associated by excessively big government. It's also the case that as government and bureaucracy grows in the United States, incentives for many people who are entrepreneurially minded can often shift away from the marketplace and coming up with new ideas and for goods and services that they believe will meet consumer demand and gets replaced by political entrepreneurship. I've often thought that people who are very skilled at political entrepreneurship would often do very well in the private sector because they are responding to sort of gaps of knowledge. They're very good at seeing opportunities. And in their case, they happen to see that in the political world. And the bigger the political sphere grows, I fear the more likely it is that you'll find many people with entrepreneurial instincts driven towards or attracted towards the political and the public sector, because they'll see that that's where more and more rewards which incentivize entrepreneurs and which then signal to entrepreneurs lie in the public sector rather than the private sector. So, as with many of these things, just like regulation, the more you reduce government, the more you shift people's incentives. And they're looking and they're searching in their alertness for entrepreneurial opportunities, much more towards the opportunities they're likely to find in a dynamic and open.
[00:50:13] Speaker A: What are some examples of political entrepreneurship? Is that just trying to find ways to get subsidies, or how would that manifest?
[00:50:24] Speaker B: Well, I'd say things like, to use an example from the Democratic Party. Remember Solyndra? Solyndra is a classic example. And it was, of course, the, during the Obama administration, when the Solinda hold that whole project, which was very environmentally sensitive and green conscious, etcetera, for energy production.
The people who were behind that were very good political entrepreneurs. They were very good at making a case to the Obama administration and different government departments and bureaucrats that they should be funded. Now, we know that ended in tears. It turned out to be an economic and fiscal to disaster. And of course, on the republican side of the equation, just think about things like Foxconn. The people who find Foxconn in the state of Wisconsin were brilliant entrepreneurs in persuading government officials, in this case, state government officials, for the most part, in persuading them to put a lot of subsidies and special benefits into the setup of Foxconn in Wisconsin, which has delivered nothing like the number of jobs and productivity that was initially promised. I find it interesting that the same person, the CEO who was most behind and the driving force behind Solyndra to get back to that, is also the same person who's been very good at attracting subsidies, government subsidies, from the Chips act to semiconductor factories and firms and businesses in states like Arizona. So that's a very good example of someone who's been a very successful entrepreneur in gaming the system in terms of attracting and knowing how to get subsidies from the government to industries which in the long term turn out to be not so successful and not so durable and not so resilient.
[00:52:22] Speaker A: Let me take one more question from Locke. Stock and barrel, great handle, by the way, he says, or she don't mean to assume anybody's gender. I agree that tariffs don't work, but what would you say to China being able to sway australian policy due to its economic influence?
[00:52:42] Speaker B: Well, thanks for that question. As it happens, I paid some attention to this because, as I mentioned, I was born in Australia and I go back there relatively frequently. What's interesting about this is that China's use of tariffs as retaliation against Australia, first under a conservative government and then under a Labor government, for the pretty aggressive stance that Australia took vis a vis China's aggressive behavior in the South China Sea regarding China's behavior during the pandemic. They slapped tariffs on things like iron ore, but also things like the wine industry as well. So this was clearly an effort by China to try and change Australia's position when it came to its geopolitical stance vis a vis China. But here's the thing. It didn't really shift australian policy regarding its negative view of China's geopolitical behavior, let alone the behavior of the chinese military in the South China Sea, let alone China's use of extensive efforts to engage in intellectual property theft around the world or China's efforts to influence domestic politics in Australia. In other words, neither a conservative government in Australia, Australia, nor a Labor government for that matter, really was influenced in terms of changing its policy in this regard. Now, what's interesting is that China has started lifting many of those trade sanctions and extra tariffs that they were slapping upon imports of ore, iron ore, but also things like australian wine into China. And the point is, the tariffs there really didn't change the australian government's position despite a change of government in 2022.
So that was interesting, because I thought it was fascinating to see that the australian government didn't back down. And while obviously domestic industries in Australia suffered as a consequence, what's also interesting is that they quickly found other export markets, most notably in big economic countries, countries with very big economies like India. So the wine industry very quickly switched up and started exporting a lot of wines to India because it has a much freer trader relationship with a country like India, which has more people now, I should add, than China. So this is an example of where China's behavior in terms of its effort to engage in economic warfare did not really pay off. And at some point, they realized they needed chinese australian mineral imports. So this is, again another example of tariffs not achieving the desired political goal.
[00:55:47] Speaker A: Well, and having just visited the australian wine country around Perth, I can tell you there's no stopping australian wine. That's some of the best in the world if you haven't tried it. Okay, we have just a few minutes left. Looking toward, if not forward to, but looking toward, the upcoming presidential election. Neither Joe Biden nor Donald Trump are anyone's idea of free trade, laissez faire capitalist champions, but they do have very different takes on key issues, from regulation to immigration to taxes. Earlier, we touched on the steady decline of economic freedom in America. Any opinion on which candidate would be better at decelerating that decline if not reversing it?
[00:56:37] Speaker B: Well, that's.
Wow. That's a very difficult question. So let me preface my remarks by saying that I'm not urging anyone to vote for any particular candidate. That's the first thing I'll say as a caveat. So when you look at Trump and Biden's respective economic policies, they have very similar views on trade and industrial policy. The differences there are quite marginal. In fact, the Biden administration has more or less continued and in some respects doubled down in other areas of trade policy and industrial policy that they inherited from the Trump administration.
Just today, Trump administration announced tariffs on aluminum and steel.
Biden. I'm sorry, yes, Biden announced, I guess.
[00:57:36] Speaker A: They'Re that similar that we can mix.
[00:57:38] Speaker B: On Mexico, chinese imports coming from Mexico of aluminium and steel. So now this is all to do with the election. I have no doubt about that, but. So they're following through on similar policies. Now, I will say that when it comes to regulation, Donald Trump didn't actually reduce the scale of regulation, but he did stop the scale of regulation growing. I think there's been good studies that have come out on the, from the Cato Institute on that subject. So that's a difference when it comes to Biden. Biden has certainly increased the scale of regulation. Trump didn't reduce it, but he didn't increase it. So that's one thing. So that's something to think about. They do have different views of taxation. Obviously. Trump wants to maintain the Trump tax cuts, I suspect, for as much of reasons of ego as it has to do with good economic policy. Biden wants to increase taxes, particularly on corporate America. So there's a difference there. So while there are significant convergences, differences between Biden's economic policies and those of Joe Biden, there are some differences when it comes to regulation and tax, and that's something that I think people should certainly think about. Again, I'm not advocating that you vote for either candidate, but I do think that these are two areas in which we find differences that at least represent some blue water between the two candidates.
[00:59:05] Speaker A: Well, thank you, Sam. I also didn't want to neglect to just give a shout out to Aier for the heroic role it played during the lockdowns and the pandemic with as the originator of the great Barrington Declaration, so we can all be very proud of their courage.
[00:59:27] Speaker B: Well, that's great to hear. I was not working at air at the time, but one of the first things I learned about AIAR was its fantastic contribution to this and the work of people like Jay Bhattachary, who suffered a great deal as a consequence of their bravery on this particular subject. But AIA was one of the few organizations that was willing to stake out a very different claim as to how the pandemic should be dealt with compared to what was coming from the us federal government at the time. So, aiardhe, I'm very proud to belong to an organization that adopted an unorthodox position and an unfashionable position at a time when it was very difficult to do so.
[01:00:07] Speaker A: And we at the Atlas Society were very proud to stand by their side. So thank you again, Sam. Thanks to what a great audience today from all over the world, including objectivists in Uganda. Shout out to you. So if you enjoyed this video or any of the comments content that we produce here at the Atlas Society, please go over to our website, atlasesociety.org and put something in the tip jar now. Be sure to join us next week when our founder and senior scholar, David Kelly, will be joined by Atlas Society senior fellow Rob Trusinski for a current events webinar discussing recent arguments over the origin of western civilization. We'll see you then?
