Straight, No Chaser
Understanding Freedom through Money, Technology, Economics and Philosophy
Straight, No Chaser
David Ansara - Land, Liberty, and the Right to Own
Private property rights form the foundation of human freedom, enabling individuals to build generational wealth and secure their economic independence. David Ansara, CEO of the Free Market Foundation, shares how property ownership transforms lives through their Kaya Lam project, which has provided over 18,000 title deeds to rightful homeowners in South Africa.
• The Free Market Foundation celebrates its 50th anniversary advocating for liberty and free enterprise in South Africa
• South Africa's statist mentality and high dependency on social welfare demonstrate the risks of government overreach
• The Kaya Lam project helps South Africans obtain title deeds for homes they've lived in for generations but couldn't legally prove ownership
• Property rights enable economic opportunity by allowing owners to use their homes as collateral for loans
• Central planning and big government stifle innovation and increase corruption risks
• The National Democratic Revolution ideology seeks to capture democratic institutions before instituting socialism
• Government should focus on protecting life, liberty, and property rather than expanding its control
• Sound money principles are undermined by government money printing, creating inflation that erodes property values
• Bitcoin offers promise by potentially separating money from state control
• Decentralization and localized decision-making lead to more efficient outcomes than centralized planning
Visit freemarketfoundation.com or find the rational standard on Substack to learn more about the Free Market Foundation's work.
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Hello everybody, welcome to the show. This is the Straight no Chaser podcast, where we talk about understanding freedom through money, technology, economics and philosophy. Today's conversation is with David Ansara from the Free Market Foundation. We talk about private property rights. In many cases, private property rights is the most fundamental human right. Private property is often understood to be physical land, like your house or your farm, or the empty stand you want to build your house on, but private property is actually every item that you own. It is what you have purchased with your time, with your money, you have worked for it. It is a possession that you have acquired through fair and free exchange, and it is your property to do with as you want.
Speaker 1:Now, in today's conversation, we actually speak about physical property. The concept is still the same, and physical property is often the very manifestation of human freedom. You get a piece of land, you've bought it, you've worked for it, somehow you acquire the land and on that land, you are now able to build a home for your family, which is absolutely fundamental to every human being. Furthermore, that land comes with value attached to it. You can borrow against it, you can secure loans against it, and it is a way for you to enhance, improve your life and that of your family. So this is a great conversation. I know you will enjoy it. David's organization has made some major, major improvements in the lives of so many thousands of South Africans. I think you'll enjoy this conversation, david. Thank you very much for giving up an hour of your time to come and talk today.
Speaker 1:So you Thanks for having me on. It's a pleasure, man. So this is going to just be a conversational journey. Talk about anything that comes up. Feel free to go down any direction you want to go into. There's no real agenda, just a bit of a free flow of ideas. I'm here to learn from you, so look forward to the conversation. So I think just to kick off Free Market Foundation. I mean you're the CEO of that organization. Start off with the Free Market Foundation. How did you get involved there? What was the thinking behind the creation of it and what can you tell us about the start of that and to where you find yourself today?
Speaker 2:Yeah, so the Free Market Foundation has quite a storied history and, incidentally, this year we are celebrating our 50th anniversary. So the FMF was founded in 1975.
Speaker 2:So, about eight years before I was born. So I really feel like I am very honored to be part of this institution which has had a massive impact on the trajectory of South Africa. The FMF really advocates for liberty. So personal freedom, free enterprise. We want people to understand the power of free market economics. When you remove unwarranted interference from government or from other actors in society, people, if they are left to their own devices, if they are self-directed, they can achieve extraordinary things and can achieve human flourishing.
Speaker 2:So unfortunately, the discourse in South Africa, and increasingly many other countries as well, is that we need somebody else to secure our fortunes for us. We need the government, big daddy government, to come in and paternalistically guide us to some kind of beneficial outcome. Unfortunately, that doesn't work. Central planning, big government, tends to stifle innovation and opportunity. It also increases the stakes, no-transcript, and we've seen the disastrous consequences of socialism in many countries around the world. And yeah, unfortunately in South Africa, socialist thinking tends to prevail. We're quite fortunate in that we have a vibrant private sector, but in terms of our political class there's very much a statist mentality that the government must do X. We have a high dependency on social welfare, extremely high debt levels which we can talk about later, and the impact of that 76% debt to GDP ratio, a yawning fiscal deficits, the government's spending way beyond its means.
Speaker 2:So an entity like the Free Market Foundation, we're a small group, we're a think tank, so we produce a lot of policy analysis. But increasingly in recent years we've been very much active in the arena of public debate and see ourselves not just as observers watching as South Africa goes down this socialist and nationalist path, but actually trying to steer the trajectory of South Africa towards liberty. Personal freedom is our highest political value and we want to see South Africa that flourishes, where individuals are free to make their own choices, that flourishes, where individuals are free to make their own choices. So we're up against it, but we see ourselves as proverbial Davids against the Goliath of the state.
Speaker 2:So the old model of a think tank was very much focused on producing lots of reports, submissions to parliament and relying on the power of reason and debate to sway people's minds. But that is very important. We still do all of that stuff. We have a policy agenda called Liberty First, which is nearly 100 pages of policy recommendations that we released earlier in the year for this government to adopt free market principles and reforms, but you also need to understand the landscape of political power and actually challenge political actors as well. So we definitely don't see ourselves as sitting meekly on the sidelines whilst these events unfold. We see ourselves as active participants.
Speaker 1:So that's interesting. You were saying that this issue of centrally planned economies, socialism, which ultimately leads to capitalism, communism If we've had these examples in the past, why do you think the socialist story persists and, as you mentioned, seems to be a growing voice, a louder voice in modern times? Is there something that, some obvious thing that we're not message, we're not carrying across? But why has history not taught us?
Speaker 2:Well, you know history. One of the features of it is that sometimes you're doomed to repeat history. So even though the Cold War ended, with the Berlin Wall coming down in 1989, there's been a lag effect where these ideas still persist. In the South African context very specifically, that is due to the old Cold War loyalties where there was a very close relationship between the African National Congress and the Soviet Union and when the ANC was in exile they very much collaborated with the Soviet Union and with other countries within the kind of broader communist bloc, the very close relations, for example, between the ANC and the communists in North Korea.
Speaker 2:And if you read Dr Anthea Jeffrey's book she's with the Institute of Race Relations, her book Countdown to Socialism. She details how many of the principles, the playbook of the ANC in exile, what's termed the National Democratic Revolution this is the ideological framework. A lot of that was taken out of the context of the Vietnamese and this idea of the National Democratic Revolution. It's a central vanguard of political agitators who basically capture the levers of power through often democratic means, using the mechanisms of constitutional democracy, to then actually gain power and then, once in power, use that to centralize political and economic decision-making. Catered deployment, cadre deployment, however you want to pronounce it. That's very much part of this methodology. It's not incidental, it's baked into this mechanism.
Speaker 2:So the NDR sees itself as operating in two steps. So the first is capture, through often legitimate democratic means, the levers of power, and then the second phase of that is to institute socialism. So if you look at a policy proposal like national health insurance, for example, that is couched in language of social justice and we need to extend health, healthcare rights to all South Africans and we need to fix some of the problems in our public healthcare system. But actually, if you look under the hood, what is the driving, motivating factors at play with the national health insurance? It's about a contempt for private enterprise. It sees the profit motive as fundamentally exploitative, doesn't see the great value that something like the private health care system brings to millions of people in South Africa and obviously there are significant public health challenges in this country. But destroying a very in this country, but destroying a very efficient, well-resourced and functional system in order to create another system that would vastly extend the power of politicians and bureaucrats over your healthcare decision-making, that is extremely dangerous and that's a policy that we at the Free Market Foundation have been pushing back against for over a decade since it was proposed. Expropriation without compensation is similar. Private property rights are the building blocks of a free society. It's not just that it's economically beneficial. Your right of ownership is a fundamental human right and it is almost the extension of your rights as a human being. And we've seen in many socialist contexts private land ownership is one of the first targets of a political communist or socialist vanguard. If you think of the fate of the kulaks in Russia, they were kind of private landowning peasants, very poor, but they were seen as a threat to the revolution. And so I think we have no shortage of significant problems in South Africa, but often the proposed solutions it would be a poison that would be worse than the initial disease. It would actually erode and destroy what little value we have there. So you know, I think we as the FMFC, ourselves as guardians of liberty, so private property rights is one of our core principles, and this finds expression in one of our programs, which is called the kai alum project, which is a title deed extension project.
Speaker 2:So many south africans.
Speaker 2:A anomaly of the transition to apart, from apartheid to democracy, was that many black south africans lived on land that was formerly owned by local councils, by municipalities, and they were essentially tenants in rental properties, and during the transition the state divested itself of the ownership of these properties, and these tenants became the new owners of the properties in which they often resided for many decades, sometimes multiple generations, properties in which that often resided for many decades, sometimes multiple generations.
Speaker 2:But although they were owners, they didn't have that very important legal proof the title deed that demonstrated their right of ownership over that property. So what the Free Market Foundation's Kai Lum project has done is come in to close that gap. So we work with municipalities, we work with private donors who support the project, we collaborate with conveyances attorneys who help us with this transfer process, and since 2010, when we started the project, we transferred 100 title deeds. In 2013, which was the centenary of the Native Land Act, which robbed black South Africans of their private property rights, but since then we've transferred over 18,000 title deeds, and about 8,000 of those title deeds have been in the last two years. So that is a very good practical demonstration of our commitment to private property rights and is the complete opposite of what is being proposed through measures like expropriation without compensation.
Speaker 1:Okay, so tell me a bit more about that. Is that a? I mean, it sounds expensive. I'm just hearing what you're saying about. You know you've got advocates or attorneys and consultants. Attorneys and consultants how is this funded? Are you a non-profit? Do you have to do fundraising? Do you have donors you can lean on a bit? Do you get any state funding at all?
Speaker 2:So we do not get any state funding. So we are a public benefit organization, pbo, so any donations that we receive are tax deductible. So if anybody is animated by this conversation, they want to support the FMF in our work, we'd happily provide them with a tax certificate. But something like the Kaya Lam project yes, very capital intensive. So many years ago we received a significant donation from Johan Rupertpert, who's very famous um south african entrepreneur and businessman, and so that that capital was used directly for this title deed program. And but a number of banks, uh, financial institutions, originators, uh ordinary companies have really bought into the Kaya Lum project and have donated very generously over the years. So it's not just that endowment from Mr Rupert. So, yeah, but one of the benefits is economies of scale. So because we have a well-oiled machine that can transfer these title deeds very effectively and we have operations in various parts of the country the Free State is one of our big epicenters the Western Cape, increasingly the Eastern Cape and even places like Mgeni and KZN, so we are actually able to, through the volumes that we're transferring, actually bring down the overall costs. So if you were an individual living in one of these homes, you could go to the deeds office and facilitate this transfer yourself, but that might cost you between 8,000, 10,000 Rand if you had to do it on your own, but we guarantee that we can successfully transfer the title deed for 3,750 rand. So if you are an individual donor and you donate 3,750, you can help to unlock the latent capital and potential of one family's home, and that's really important.
Speaker 2:If you read the the work of the Peruvian economist Hernando de Soto, you'll see that many poor people have what he terms dead capital, that they have an asset but they can't leverage it because often their ability to demonstrate their ownership rights is limited, and so that constrains you in terms of economic opportunities, like, maybe you're too afraid to leave your home for an extended period because you're worried that somebody might come and lay claim to it or squat in your home.
Speaker 2:This impacts women in particular. Often, for example, if their husband passes away, then the family of of their late husband now comes in and tries to lay claim to the house, and so having a title deed that's in your name gives you that proof of ownership and your ability to defend your property rights, and so this is something that maybe we take for granted, but not everybody has these opportunities, and if you want to use your home as security for a loan, as collateral, you can then use that, and this enables you to perhaps start a business or get involved in some other kind of income-generating activity that might help you to improve your economic circumstances.
Speaker 1:That sounds amazing. I mean, it sounds like one of those real projects, or the projects that make a real difference on the ground, and you've been doing this for a number of years now. You've got a well-oiled machine to quote yourself as to how you get this done. What's the feedback been from the people that you've assisted? Have you been to see people that have now been able to go to the bank, get a loan against their property, either do extensions or improvements, or get children through varsity or something? What has been the feedback on that?
Speaker 2:Yeah. So, gavin, we don't really track too much the trajectory of the beneficiaries after they've received the title deed. We would like to, but our main focus is really just doing the transfers. But you know, in some instances where we've been asked by a bank or another donor to do some research, we have found that there's been quite a positive impact, particularly like on credit extension. For example, we've been working with a researcher from the United States, an economist, who's busy with research in that regard.
Speaker 2:So, yeah, and the title deed handover ceremonies are something to behold. It's very emotional. Often it's the oldest person in the family who's receiving the title deed. So we've even had people in the 80s, 90s or even 100 years old receiving a title deed. And you can imagine, given when those people were born, how you know their circumstances have changed and you know I've outlined some of the economic benefits of having secure title, and so some of the journalists, for example, at some of these ceremonies, will say to an old gogo well, okay, but why are you, why are you in tears here? You know, because you're not going to be starting a business a little bit of a patronizing kind of line of questioning.
Speaker 2:But then this person will say well, you know, for the first time I've now got a title deed and now I can die knowing that my children will receive the home that we as a family have invested all of our life's work into, you know. So that is hugely significant and there's a recognition, I think, of the fundamental human dignity and agency of these beneficiaries. So, yes, it is a charitable endeavor, but ultimately what we want is empowered individuals. There's no shortage of CSI kind of initiatives in South Africa and a lot of those are well-intentioned and in some cases quite effective. But I think we want to get away from this palliative treatment of some of the problems in South Africa that you know, just kind of at the margins trying to solve some of these problems. We actually want to get to the root cause of a lot of the problems, and often it's policy, and policy is downstream from politics. So we need to use all of the mechanisms at our disposal to enhance people's personal freedom.
Speaker 1:So I just want to come back to one thing that you said earlier about the socialist agenda being well thought out, a plan in place, a strategy where the plan is to go in, infiltrate you know, through democratic process, and get yourself elected and then off you go, start putting your hands in the cookie jar. So on the one hand, it sounds orchestrated and well thought out and intentioned A small group of people, perhaps that that's what they're doing. But on the other hand, you need to sell that to the general public as well. So where is the disconnect between the general public that is looking at this and has voted for these people because they ultimately, in a democratic society, its majority vote how things work. So how is the general population accepting of these regimes or philosophies or political thoughts that clearly have shown throughout history to have not delivered on their promise, but yet they persist? What do you think that is?
Speaker 2:Well, gavin, I'm still trying to figure that out, but here's my answer. So I think South Africans, as a general rule, are actually not naturally predisposed to these kind of arguments or philosophies. I think most South Africans are actually quite socially conservative, tend to be quite religious, you know, want to improve their circumstances, want the best for their children, have maybe a natural distrust of politicians a healthy distrust. But I think if you look at the post-1994 socioeconomic circumstances Dr Franz Grenier has spoken extensively about this and his polling for the Social Research Foundation is also very interesting You'll see that actually a lot of South Africans rewarded the ANC at the polls because their socioeconomic circumstances were improving at the polls, because their socioeconomic circumstances were improving post-94, but more particularly in the late 90s and mid-2000s when there were macroeconomic reforms. Then we saw the ANC reaching a higher level mark of nearly 70% electoral support under Thabo Mbeki's, under his second term, and that was in 2004. And 2004, 5, 6, there was economic growth north of 5% and so people could feel their circumstances changing and they were optimistic about the future and things were on the up and up. But post-2008 financial crisis and Jacob Zuma coming to power, then we started to see the consequences of some of these poor policy decisions. And ANC supporters also track downwards. And now, 2024 May, we saw the ANC recording its lowest ever national polling numbers at 40 percent.
Speaker 2:So I think the electorate we shouldn't patronize them. They are, they have a keen sense of their own interest. Just because you're a poor person doesn't mean that you don't act rationally in terms of your self-interest. Obviously, parties like the EFF are avowedly Marxist-Leninist. I mean, they're much more radical even than the ANC. So there's still a significant constituency for that group and you know they maybe are treading water a little bit. They've kind of stalled in terms of their progress. But I think generally the kind of conservative nature of the South African electorate is actually fairly beneficial. But yeah, look, look, it's complicated um that the anc often on the campaign trail will warn poor south africans that if they vote for the opposition then they're going to have their social welfare grants taken away, and that kind of fear-mongering is can be very effective. I mean, one of the interesting side effects of the gnu is now you have the DA and other opposition parties in government and the social grants haven't gone away.
Speaker 2:I actually am very critical of the social grants. I think they foster economic dependency, they're a huge drain on the fiscus and ultimately it's this kind of paternalistic attitude that we need to basically carry the poor and that they are incapable of improving their own circumstances. I reject that, uh, entirely. Maybe some people might make an argument that you know, the indigent, the people who are physically disabled, for example, can't participate meaningfully in the labor market, which is fair enough. But if you are an able-bodied young South African, you should not be dependent on a welfare grant.
Speaker 2:And Milton Friedman, the famous Chicago economist, once said that there's nothing as permanent as a temporary government program. And during COVID we had the so-called temporary relief grants, and those are still here five years later. So you know, I think there's also a double impact. It's not just that it costs taxpayer money to fund these grants 28 million of these grants every month that are issued but it's also that that person who's a beneficiary of the grant is taken out of value-generating activity. They lack the incentive to contribute meaningfully in their own right. And I think also there's a kind of a broader, maybe a social psychology point to be made, which is that your work is not simply about your income. I'm sure you've been to a dinner party where people the first question they ask you is what do you do? And maybe they just can't think of anything better to ask you, or they're just making small talk.
Speaker 1:It's like how's the weather?
Speaker 2:Yeah, but it is a big part of your identity, like your sense of self-worth, are you contributing to society? And, yeah, maybe you're flipping burgers at mcdonald's, but you're adding value to to someone if you're doing that right, so, uh. So I think we need a big mentality shift around our attitude towards work in South Africa. Anything of any value costs something and needs to be produced by somebody. Nothing is for free and, as Thomas Sowell once said, there are no solutions, only trade-offs. We need to understand that all of these highfalutin schemes that we come up with that really just involve redistributing wealth from the productive to the unproductive. That is unsustainable. That's not going to help to solve the problems in South Africa.
Speaker 1:So it's not just a South African problem, as you mentioned at the beginning. This socialist sort of thinking seems to, especially over the last few years. I don't know if it's almost reached the top and maybe it's gone so far left it's now the pendulum is starting to sort of swing off to the right. Now the pendulum is starting to sort of swing off to the right, but it does seem to be very liberal, sort of almost socialist thinking and this idea that the state needs to get bigger regulation. You need more regulation because people essentially can't be trusted, so we've got to control people so that they don't do something that we don't want. How would you explain to somebody the benefit of smaller, lesser governance, the nation state as a smaller government, versus the growing sort of size of governments we seem to see, not just in South Africa but I think, around the world?
Speaker 2:So Frédéric Bastiat, who was a French liberal intellectual in the 19th century. He spoke about three things life, liberty and property. That is what the state should be concerning itself with. So protecting the rights of you as an individual. So there are some people in the broader libertarian or anarchist movement who think that there should not be any government whatsoever. But if you are going to have a government, it should be very constrained in its scope and very narrow. And a very important thing is to be able to protect people from violence from others who may wish harm upon them, who want to undermine their rights. So that's why you have a police force, kind of a neutral entity, a court system that can adjudicate disputes between people. Those things are very important and you know that obviously requires funding and administrative capacity to engage in that right. So there's life, there's liberty. Do you have the ability to exercise your choices consistent with the rights of others? Do you have the right to start a business of your choosing, business of your choosing? Do you have the right to move, to engage in your free speech, rights you know, to articulate your opinions, to have a particular belief system, a spiritual or intellectual belief system that is valuable to you without other people telling you what you can and cannot think or say. And then property is what we were speaking about earlier, your right of ownership. So life, liberty and property really are the core, and the problem is when you start to deviate from that core you add more and more powers. As I rightly remarked earlier, when you add a new power it's very difficult to rescind that and to take that back. So power once granted is very difficult to reclaim.
Speaker 2:And there's also, I think what happens is a kind of an entropy that the state has a natural inclination to grow and to start encroaching on these other spheres of life. And that's often because a large, self-interested, self-reproducing bureaucracy develops. And we see it in South Africa. We have about 16 or 17 million people who are formally classified as employed in South Africa, but about 2 million of those people work for the government in some capacity, whether that's for the national government or province or municipality or a state-owned enterprise. So that's a significant chunk. About one-eighth of the workforce is working for the government. And again there's that double cost. There could be somebody who's adding new value, but actually often they're just a bureaucrat pushing paper around, and so even well-intentioned bureaucracies tend to create lots of wastage. They have their own incentives as well, and I mean we've seen it in the developed world as well.
Speaker 2:People often talk about the strength of the civil service in the United Kingdom, for example, but in many respects that civil service has become so powerful that it actually infringes on the choices of ordinary citizens, and if you're a politician or some kind of other social activist trying to roll back that, it's very difficult. Like nobody in the United Kingdom is meaningfully talking about reforming NHS and privatizing NHS, so that's almost like a holy cow that not even the conservatives talk about. So you know. So I think there's this natural tendency towards overreach and growth, and a lot of it is because, you know, people have a desire for status and power as well as material advantage so often, and politicians also operate on a different set of incentives. They're wanting to be re-elected, they're wanting to look popular, and there's a kind of social valence that they seek.
Speaker 2:It's not always about what's optimal for the economy, for example, and so I think we need to move away from this idea of like that we're electing politicians to manage the economy. You often hear that term manage the economy. It's like no, the economy is a bottom-up organic system that's kind of like a forest. And yeah, the forest needs water, but it is self-sustaining and is infinitely complex. You know, you can be a gardener in a garden, nourishing the garden, but ultimately you don't determine how the plants grow and how all of the insects and birds and all of those little organisms interact with one another. So you can play a facilitating role as a public official to let people be free to develop their own businesses, their own ways of doing things, and I think that's far more effective but also more respectful of people's rights.
Speaker 1:Yeah, and speaking about governments, that should be life, liberty and property, as you mentioned. That's their role. Having been in the US for a couple of years, just sort of listened to how Americans view things, and I think the US was sort of founded on that same principle of the power in the individual states very limited federal governments. That was the intention. It seems to be that that's not the case anymore, and I think it's what you said Governments, they're just an organism, they just tend to grow. There's always some project that needs to be launched and a new department to be opened and some new regulation that's required. So it does seem to be a case of these organizations just keep growing, keep growing, keep growing. What is?
Speaker 2:the role. I mean, I think something like Doge is really an important initiative to actually expose some of the wastage and the capital misallocation that I mean the United States is an incredibly wealthy country but there's just so much wastage and I mean you would have seen online all of these kind of vanity projects that were being sponsored by USAID and other entities and, you know, maybe USAID has had a positive impact. For example, I was talking with someone this week who was quite involved in malaria initiatives. Anti-malaria initiatives and USAID funding did play an important role there, but I would say that that was a bit of an outlier. I think most of those programs are kind of ineffective. I mean, I think donor aid and this is a bit of a sidebar discussion if you read the Tyranny of Experts by Bill Easterly I mean there's so many examples of this kind of well-intentioned donor aid that just gets misappropriated or misspent or wasted.
Speaker 2:There's a great example is the, the play pumps, and somebody one of these development agencies, had this idea of basically in rural Uganda, where there's difficulty accessing potable water, that you build a well and you put a children's carousel, one of those kind of old-fashioned spinny carousels, and you attach that to the pump of the well and the theory is you can have kids playing in the playground, spinning the carousel, enjoying themselves and automatically pumping water, and this caught the attention of newspapers around the world. It seemed like this really great, quick, quick fix, this, this double advantage kids playing outside and you get fresh water. But it turns out that actually, if you look at the application of a project like this, that there's all sorts of social and cultural factors that play into this. So what tended to happen was the children, who are fairly malnourished, ended up not having the energy to push this pump and the dynamo was quite. The resistance was quite strong, so it wasn't like a kind of a loose fitting carousel. So now they're having to push this, this very heavy thing, and so often the women in the village now had to come and push this play pump and this was very humiliating for them because you know, they now kind of seem to be kind of playing on this children's playground equipment.
Speaker 2:Uh, you know, typically a basic manual water pump, there'd be somebody in a village who would be able to fix it pretty easily, like one guy with a spanner, if it had to break down. But when this play pump broke down. There was specialized parts and equipment that needed to be ordered from many hundreds of kilometers away and that had to be shipped in, and it would take weeks for the play pump to be fixed. So these are the kind of very subtle social factors that it's very hard to plan for in advance.
Speaker 2:I mean, you're a business person yourself. I'm sure you've experienced what it's like trying to understand what the market need is. It's not like you just wake up one day and know exactly what the market wants, but it's through that process of discovery that you interact with other people. You understand what the demand is and you try and match your service to meet that demand. So you know, aid is a good example of when you have state bureaucrats who they might have a good idea or they think it's a good idea, but often that money goes towards something that's kind of inefficient or ineffective. Yeah, so I think Doge is really lifting the lid on a lot of the wastage and this kind of squandering of taxpayer resources and I think strength to their arm.
Speaker 1:Yeah, I think you've raised something pretty interesting there, that you know good ideas are perhaps a dime. A dozen governments get a good idea about something, or some politician or well-meaning individual gets an idea, and they throw money at this thing to see if it works. And then it doesn't work and they move along. You know, in my business, if I get a great idea, it has a real world cost to me. I have to take money out of my business, put it down and if this idea fails, I've lost that money. I have to lick my wounds and rethink this carefully and if I keep on doing that, I just simply go out of business. That doesn't seem to be the case with governments and public money. There seems to be no real world consequence, and I'd like to tie that into the paper that you did on sound money. What do you think is the link between government and money and where? Something like Bitcoin, which is outside of the current system? What is the potential there that you're excited about?
Speaker 2:papers and one of them was on sound money. It's called liberty first, and it's based off of the framework developed by another think tank in canada called the fraser institute, and they released the economic freedom of the world report, which is an index. Every year they update it. There are 165 countries ranked from most free to least free. Out of the 165, south Africa last year was 81st, so we're kind of in the middle, and this measures various things like size of government, the regulatory framework, private property rights and the legal system, your freedom to trade internationally, and then also sound money.
Speaker 2:So I authored the sound money paper and, yeah, I think your question is an interesting one. I think, in many respects, money itself is a form of property, right? If you think of your business, you are investing your time and your energy and your labor in generating income for yourself and you want to know that your income is not going to lose its value, that the money that you keep in the bank or under your mattress or wherever you keep it is, is not going to be denuded by inflation. And inflation, to quote Milton Friedman again, is is always and everywhere a monetary phenomenon, in that the, the supply of money, determines the value of it. And we have this crazy example just to the north of us in Zimbabwe, where the money, the money printers were turned on. There was also violations of private property rights, but there was great pressure brought to bear by Mugabe and his thugs on the central bank of Zimbabwe to print loads of money. And initially what happens is it's almost like you get this sugar rush because there's all this new money in the system.
Speaker 2:It's almost like you get this sugar rush because there's all this new money in the system, but very, and so you have this temporary surge, but very quickly, uh, that filters through into the rest of the economy and what you have is a rapid diminishment of the value of your money, which in its in a way, if you think about it, is a form of expropriating other people's assets because you're taking value away from them. And yeah, look, there's these kind of extreme examples, like in Zimbabwe. But unfortunately, in many other countries around the world and in established industrialized economies, there's been mass monetary printing as well. If you think of the quantitative easing programs that started post the global financial crisis, huge amounts of money printing during the COVID crisis as well. So I think there's some real problems in the monetary system globally and I think there's a really strong case for free banking.
Speaker 2:For getting back to the first principles of how money originated in the first place, the South African Reserve Bank, I think, was only founded in, I think, 1913 or 1917, somewhere like that. But there was money before the South African Reserve Bank existed. There was money before the US Federal Reserve. It was private banks issuing currency and then they had to make sure that that currency retained its value, and what underpinned that money in the past was a hard form of money, which was gold. But through various actions, the US government moved away from the gold standard and to a US dollar standard and then eventually to a fiat standard.
Speaker 2:Um, in 1971, when richard nixon, uh you know, ended the, ended the gold convertibility of the us dollar. So I think, um, yeah, we, we live in a fiat world. Uh, if you, if you read the bitcoin standard by safety in a moose, uh, you know, you all kind of understand how, in many respects, our global financial system is kind of propped up by artificial money which is created by politicians out of thin air. And, yeah, that has enabled many countries to become highly indebted and to kind of borrow from the future in order to finance the present. But you cannot do that indefinitely. At some point you have to kind of have a real solid foundation to your money. I think that's where Bitcoin offers quite a lot of promise and opportunity.
Speaker 1:Yes, and opportunity yes. So I agree with you there that governments having access to so-called free money probably is one of the reasons why they just get bigger. If they had to raise the money through traditional taxation and you and I received a letter from SARS to say, you know, the NHI is now going to cost every South African citizen 100,000 rand, please sign the check and post off to this address so we can implement I don't think they'll get their money. A little bit like the e-toll fiasco that we've gone through in the last few years. That was a case of really explicit external taxation that was required to fund a project and people just said sorry, not doing that. If the governments don't have access to money, they have to then do taxation, explicit taxation.
Speaker 1:If they have the money printer, they can tax you through. You know, they can just print the money and inflation happens. So the separation of money and state, would you say that is the promise of Bitcoin.
Speaker 2:Yeah, definitely, I think I mean another benefit of something like Bitcoin is Definitely, I think I mean another benefit of something like Bitcoin is because of the digitalization of our monetary system globally. I mean that's had fantastic advantages, right, like you can log onto your phone and you go into your banking app and I can send you an EFT and that's all very convenient. A choke point, right, that, if you look, during the COVID crisis, there was those protests in Canada by the truckers who were refusing to submit to the vaccine mandates. They were crossing the border between the US and Canada and the government was saying, well, you're not allowed to cross the border without getting a vaccine. And so they protested this. And there was a kind of peaceful, nonviolent protest against the government in Canada and people started supporting the truckers through crowdfunding platforms. But at some point, the government felt so threatened that they said, well, we're going to deem this group of peaceful protesters a terrorist movement and if you are funding them, then you're in breach of anti-terrorism legislation and regulations. And so they cut off all of these truckers from accessing their funds, and then these protesters actually ended up pivoting to Bitcoin and that was a way for them to get those funds.
Speaker 2:So I think there's a very important civil liberties angle to this as well. I mean, there's the same with Alexei Navalny in Russia, who got frozen out of his bank accounts by Vladimir Putin. He also was able to successfully pivot towards Bitcoin and, yeah, unfortunately he met an untimely end at the hands of the Putin regime, but his movement still continues and you know they're still being financed with Bitcoin, so, yes, so I think, yeah, monetary printing is a way of actually indirectly subverting and expropriating people's assets, and you know, I think one of the features of the current system as well like if you think of the quantitative easing programs in the United States and Europe is that what it has done is introduced a flood of new capital with the click of a mouse into the financial system, and often it is people who are closest to the spigot that get to use that money first. And so I don't know if you noticed, during the COVID pandemic, all the businesses were being locked down and mom and pop stores were closing left, right and center, but if you looked at your portfolio of your equity, your JSC stocks, they were going through the roof. This is the same with S&P 500.
Speaker 2:So there was this disconnect between Wall Street and Main Street, and a lot of that was because of government-backed money that was being flooded into the system and so that created an artificial inflation of asset prices. And so, yeah, a lot of the growth that we've seen in equity markets in recent years is kind of artificial as well. You know, it's not based on adding new value. You see a lot of technology firms, for example, having access to capital and not being able to really generate revenue, but they're really highly valued on equity markets and I think that is a consequence of the kind of broken money system that we have. Just a recommendation for your listeners is Lynn Alden's book Broken Money, which really goes in with a lot more detail, a lot more sophistication than I've done on this chat today, but, yeah, that's one of the best books on this topic.
Speaker 1:Yeah, that book is amazing. Anytime Lynn does a podcast some way, I do try my best to listen to it. What I enjoy about her? She has really an unemotional way of talking about it, so very calm and composed, and comes at it with good intelligence and good research, so she's always good to listen to. In fact, on that note, I I think it was in one of her presentations she showed a slide where she overlaid the increase in the money supply by the increase in the S&P 500. And basically they were exactly the same. So as the money supply went up, so the value of the assets went up, and that was just an indicator that. Has any true value been created? Or is this just the inflation kicking in and asset prices increasing? So really, interesting to see that.
Speaker 2:And you made that point earlier that ultimately a lot of this is being driven by central banks that are essentially bailing out profligate governments. And the US deficit, the fiscal deficit, is something like 37 trillion dollars and it kind of goes up by hundreds of billions of dollars a year, probably even more than more than that just. And yeah, I mean there was this great wave of enthusiasm for the Trump administration and things like Doge are very important, but Congress recently sat and raised the debt ceiling again, so more kicking the can down the road. So this monetization of government debt I think is hugely dangerous. And yeah, I mean Doge as important as it is and what we were talking about earlier, I mean it really is really critical. It's not attacking some of the really big expenditure items like Medicare and Medicaid in the United States.
Speaker 2:I mean, you know the US more than I do, but yeah, so I think a country like the United States, as you mentioned earlier, was premised on small government. I mean the federal government that we have today, with all of its executive orders and all of its new branches, is quite a recent phenomenon really. It's only since FDR that the federal government has really started ballooning in size and scope. So I'm a big fan of America as an idea, but the United States as a political entity has gotten way out of hand. So I think we need to return to some of those first principles of the founding fathers. But yeah, political devolution and decentralization is another theme that we can explore, which I think is part of that American ideal, another theme that we can explore, which I think is part of that american ideal.
Speaker 1:Yeah, no, definitely. Um, well, david, we're coming close to time. Um, is there any topic that you want to speak about that we haven't covered so far?
Speaker 2:yeah look. So I think, just in terms of our work with the free market foundation, we're big fans of decentralization and devolution and federalism and privatization. So I think a recurring theme for us is diffusing power down and out through a political system or economic system. We really fundamentally believe in people's rights to determine their own future, to generate prosperity for themselves and their families, and we think that you need to respect that and that hugely complex systems require people at a much more localized level to be empowered to make decisions. So you know, you might think that you're quite smart, but you don't really understand the full complexity of the thousands of decisions that are made on a daily basis. So even the most enlightened and well-intentioned bureaucrats simply cannot understand the level of complexity in a modern economy like ours.
Speaker 2:The classic example is the shoe committees that used to meet on a regular basis in the Soviet Union, filled with smart actuaries doing modeling and projecting how many shoes should be produced in the Soviet Union on any given year. They would come up with this very precise number, but some small change in the weather or in people's preferences or in population growth. Whatever the case may be, there would either be a massive shortage of shoes or a gross surplus of shoes. They never quite got it right, but in a market economy you don't even think about is there a shortage of shoes or a surplus. There's always the perfect amount of shoes to meet the demand right. So you could go to a store right now and purchase any shoe you like in a market. That's the beauty of a market it provides. Obviously, not everybody has the, the resources, the means to afford that shoe, um, but they have the capabilities to to generate value and to make a purchase like that yeah, that's a great example.
Speaker 1:And if that store doesn't have the shoe you want, you just go to the store next door that also sells shoes and they will probably have the shoe you want and at the price range that you want. And it's as you say. It's a great little free market example happening right there just your choice to go into a shoe store and buy any shoe that you want yeah, my wife thinks that I buy way too many running shoes but, I'm trying to explain to her that you know you need to keep them fresh so that you don't hurt yourself.
Speaker 2:But those arguments I'm still working on it.
Speaker 1:Well, good luck with that, David. Thank you for your time. Where can people reach out to you? I know you have your own podcast as well. Can you just tell the audience how to connect with you?
Speaker 2:Yeah, so freemarketfoundationcom You'll see our full list of policy proposals articles. We recently launched the rational standard, which is our own news and opinion website, so that's active on substack. Just search for rational standard and you'll see a daily new post from us there. We've also got a rational standard podcast, which is every friday at noon. We do live stream and you can catch the recording of that. If you can't watch it live, but, yeah, most of the social media platforms YouTube X, linkedin, et cetera you can find our analysis, and in the mainstream media as well, you're more than likely to. If you open a newspaper, find an FMF author or associate writing in defense of liberty and free choice. So, yeah, we're a pretty active bunch, but we also rely on ordinary people supporting us. So, yeah, if you want to donate financially to us we do accept Bitcoin, by the way so if you want to send us your sats, we'd happily receive those. But, yeah, we're a small group, but I think we punch above our weight. So, yeah, but we need all the help we can get.
Speaker 1:Excellent. Well, thank you, David. I appreciate you giving up your time. Have a great day and all the best. You guys are doing fantastic work.
Speaker 2:Thanks, Gavin, for having me on and good luck with the rest of the show. Bye.