Life after Capitalism

Real Communism has certainly been tried and it was a disaster. We are currently living under real capitalism, but how is it faring? Are we living in free-market paradise? Or is it time to start thinking about life after Capitalism.

Transcript

SPEAKER_00 0:05

Real communism has never been tried. I'm sure you can visualize the speaker quite vividly. Patchy facial hair, spindly limbs, and a rainbow flag lanyard. Universities are home to many young communists, and this is a phrase that you'll often hear when questioning them on their ideology. If it's so good, why did the people of the former Russian Empire experience nothing but misery under communism? That is, if they weren't one of the millions who were killed directly or indirectly by the regime. Real communism has never been tried is always the answer. We are asked to believe by modern communists that, should we wind back the clock, add some checks and balances, knock off some bad faith actors, Russia after the revolution would have been a paradise? No. A godless ideology like communism has only one outcome: untold horror. Real communism has been tried, and the outcome was not pretty. Just as the Russian Empire was experiencing revolution in 1917, in the 1980s the West was having one of its own, the Reagan Revolution. Instead of communism, it gave us the ideology of neoclassical economics. Unbridled by an autism diagnosis, because it hadn't been invented yet, Margaret Thatcher was able to usher in the revolution in Britain during the same time period. And so contagious was this wave of capitalist revival that even Australia cottoned on, even while governed by the Labour Party. Poor Keating Labour put aside the more socialist leanings of the party to enact a sweeping deregulation program that included floating the Aussie dollar and privatizing iconic state-owned companies like Qantas, Telstra, and Commonwealth Bank. It's been 45 years since the Reagan Revolution, and it's time to take stock of its fruits. Neoclassical economics promised us a trickle-down paradise, but look around and ask yourself, are we there yet? Or has something gone wrong? Communism promised that all men would be equal, but delivered privilege for the higher-ups and their buddies and squalor for the rest. Capitalism promised prosperity through free markets, but has delivered the lowest real disposable income in generations. Communism promised economic progress by freeing industry from greedy capitalists, but delivered stagnation. Capitalism promised growth through efficient allocation of capital, but delivered de-industrialization and a nationwide productivity crisis. Communism promised to redistribute the wealth to the working class, but delivered corruption and cronyism. Capitalism promised a system where birth didn't matter, as long as you were a hard worker, but delivered a system where home ownership is reserved for those with access to the bank of mum and dad. We need to face reality. The end result is looking very different from the picture on the side of the packet. A question that started with crazy commies on campus is now being asked by people from all walks of life, and from all over the political spectrum. What on earth is going on with capitalism? If you ask a neoclassical economist where we went wrong, you'll get a variety of answers. Too much government debt, too much private debt, big government, crony capitalism, public education, lazy young people, the list could be endless. But let's be consistent. Boil down all the excuses, and all they are saying is, real capitalism has never been tried. We are asked to believe by neoclassical economists that if we were to wind back the clock, add or take away some regulations, knock off some bad faith actors, and the 21st century would be a paradise. So moving into the next part of history, what can we expect to be the defining mark of the new economy? What will life be like if we break out of the neoclassical mould? What is life after capitalism? Welcome back everybody to another episode of Common Christendom Podcast. I'm hoping you all had a good Easter. I'm hoping you all had a good good time. Had a good time and had a good relaxing uh I love I love that Easter they give you a at least at least in Queensland they give you a hangover day at Easter Monday, which is always good to relax after the festivities if not if not actually being hangover then then just relaxing after the festiv festivities. I love Easter. It's a good time. More so than Christmas. Christmas is very hectic. It's not as relaxing until after Christmas, but Easter I find actually Easter I find actually quite a bit relaxing. And it's um it's a glorious thing because um you know, while we always to think about the war on Christmas and you know the secular people have, you know, turned Christmas into a into a celebration about winter and snow and Santa and all that, uh Easter, they haven't got their hands on Easter. They haven't got their hands on Easter. You know, it just hasn't um because it's and I think the reason is because it's more of a complex it's more of a complex celebration, you know. If you want to do like a watered-down version of Christmas, you know, you can have a you can have a Christmas card that says joy, hope, peace, you know, all these good things, and that's easy to boil down, but Easter's a bit more complicated, you know? Because we celebrate the crucifixion and uh it's uh it's a sad thing, but it's also uh, you know, it's sad but conflicting, because we we are sad that it happened, but also, you know, we know that it's happened for our benefit and it's a conflicting thing, and then of course you have the joy on Sunday. So it's uh but for that reason I think the that they haven't been able to capture Easter just the way they've done to Christmas. But I had a good Easter and I'm recording this uh the week after Easter, so I hope you guys did have a good Easter too. Um but speaking of um secular people taking over our religious uh religious days and turning them into something more commercial, today we're gonna be talking about capitalism. We're gonna be continuing our series on um how the world seems set to change in the next few years. We can all feel that we're sitting on the edge of sitting on the edge of who knows what, and just feels like things are getting ready to change, and I would agree with you, and uh everyone can feel it. So um we s if um again if you haven't um seen the the or listened to the rest of the episodes in this little series, you can go back and watch the first episode, which was the Ecclesiastes View of History, where I talk about uh I talk about defending the cyclical view of history, which is an uh good episode to start with, and then we also did Life After Calvinism, talking about how uh church conflict seems set to change, and then we talked about uh life after conservatism, about how things are set to change in the f uh in the civil realm. And today we're talking about um capitalism, why? Uh, because I, as I outlined before, I'm breaking these categories up into the three forms of government we would extrapolate from the Bible, which is church government for the spiritual, uh, civil government for the uh for the ruling of uh the physical uh realm, and family government, which is the the rule of a father over his family, which is the smallest the smallest unit. So why am I talking about capitalism if this is meant to be the category of family government? Well, um I'm talking about capitalism because family capitalism and economics more broadly is the study, I believe, the study of the dinner table. It's the study of um, you know, the house that the dinner table is in and um how much dinner you can afford to put on the table. And realistically, um, as much as we don't like to sound so vain about it, money is definitely a big driving factor as to why we will or will not have children or have many children or have few children, so it really is definitely an appropriate uh thing to talk about when we talk about family uh government. So today we're going to be talking about economics and how economics seems set to change. Now we talked a little bit about this. This follows on a little bit about from our episode on the civil realm, because in that episode we talked a lot about how um the political parties seem to be not fit for purpose anymore, about how you know left and right, these labels don't really make sense anymore. And that um I think is also the case with economics. Um we seem to um just like in the civil realm when we when the Cold War has had brought about these sort of liberalism versus communism um debates, um, it's it's sort of the same thing with with economics. As I if you didn't listen to the last episode, I said that um I talk about liberalism versus communism rather than communism versus capitalism because communism is more of a totalising uh ideological system than just economics, and it's the same with liberalism, is more of a totalizing ideology rather than just economics. But today we're going to be talking about the the part of liberalism which does encounter encounter um economics, which is what we would know as capitalism or um neoclassical uh economics. But what is an e what is a neoclassical economics and where does our current um where does our current um idea of economics come from? And where do our current economic orthodoxies come from? Um well we have to sort of wind back the clock again like we did last episode to before um to before World War II, which is sort of the founding myth um of our of our current age, and think about what capitalism really was before the modern day. And we need to cast our minds back to really before before Adam Smith wrote his landmark Wealth of Nations. Uh because that's the book where that's the book that um a lot of people recognize, rightly or wrongly, as the almost the genesis of of um free market capitalism as we know it today. Adam Smith wrote this he was a Scottish uh philosopher. Um by his contemporaries described him as a very um as a bit of a you know, he was kind of like a he was kind of like a Twitter user today, but in real life. He was um he was a little bit antisocial, he was a little bit um he his mind wandered off, indeed himself wandered off. Apparently sometimes he would go out for a walk and be deep in thought and forget where he was going and end up many miles from home when he shouldn't have been. Um he never married. Um apparently he um prof confessed that he wasn't very attractive, but he the one good quality he had about him was his um enormous library that was in his home, which you know, game recognizes game. I'd like or I'd always love a big a bigger library, and I'd always I'd always love to be more attractive too, but I think the ship has um the ship has mostly sailed for that on me. I think unfortunately most of my features are set in stone at this point. I don't think I'm gonna grow any taller or whatnot. Um but before Adam Smith, before Wealth of Nations, and this is of course the book which starts talking about things like, you know, the division of labor, if we you know Adam Smith he talked about his theoretical pin factory, where um it would be more efficient if one person were to make the pinheads and then one person was to make the needles and one person was to attach them to the pin, and that would mean more profit because it would be more efficient. Um he talked about things like supply and demand, things we take for granted today as part of economics, but these were new ideas at the time. Um and indeed he um can or is often credited with the genesis of the idea of GDP, gross domestic product, uh, because measuring an economy back then wasn't what it is today, and there was no real standard way of measuring a country's economy. It was more a case of um people even compared the size of the king's treasury rather than um than the GDP, which of course is stands for gross domestic product, and if you don't know about that, it's basically just every time there's a transaction you write that amount down, and basically the GDP is the sum of all the transactions in the economy, and it's how we measure the size of the economy, which is through the transactions that happen and the activity that happens. Um but before this before this, before we had you know free markets, we had um we had a thing called mercantilism. Now, mercantilism was more of a and of course this is this is pre seven uh Well Wealth of Nations was um published in 1776. So this is so if we go back a little bit further, we get to mercantilism. Oh, this is very good. Pookie has brought the tea, the cup of tea into the studio. I'm not gonna unmute the microphone for my little sip here. I don't want to um Thank you, Pookie. I don't want to scar you all again like last time. So we go a little bit further back to 1500s, 1600s, and we have a we have a concept called mercantilism, and it's more of a zero-sum game. In mercantilism, you want to fo the idea was to focus on maximizing exports and minimizing imports, so focusing on self-sufficiency. And it was also a case of focusing on uh produ uh domestic production. You didn't want to export raw materials, you wanted to uh manufacture them in your country because that means that they are worth more. Um exporting exporting raw goods um to for to another country for them to process um would result in, of course, if you send, you know, if you send raw uh what's the example, if you send crude oil in a barrel to another to one country, you'll get however much money per barrel, and obviously the price of oil per barrel has been very, very volatile recently. But let's say you get a hundred dollars for your barrel, they'll refine that into diesel or petrol or whatever, and the sum of the and the price that they would fetch for that petrol or diesel would be uh more than a hundred dollars. And in fact, if you take away the the um cost it uh what it costs to refine the oil, you would be getting enough money to have a profit. So they would in mercantilism you'd say you don't want to do that because you're missing out on that value which can be created and it's seen as a loss. It's more of a so mercantilism was more of a zero-sum game in that sense. Um but um but Smith and others saw that they even saw that people were willing to, on pain of death and imprisonment, were willing to smuggle goods into England and Scotland Um and this was a very risky business smuggling. Um and he thought to himself, why? Why are they doing that? There must be a reason. And the reason is that you can actually make a lot of money doing that. And why d why would they want to do that? What's the incentive for them to do that, and why is that gonna make them a lot of money? And that's one of the reasons he decided to go and uh write this book. And it took a little bit, but these ideas really caught on, and um the idea of opening up your markets to imports and exports freely really started to take off. Um so uh so after after these ideas started to um started to uh take hold, we got we have, you know, after Adam Smith, after his time, we get sort of the infancy of capitalism where we want to um open trade, open our borders to trade, we want to open our borders to exports and imports, because they believed that that was um that was going to bring them more wealth than it would have if they had followed the mercantilist system where it was more of a zero-sum game. So that's sort of the uh the infancy of capitalism, but really capitalism is w as we know it, we need to go back to again we need to go back to World War II. Because if you have a capitalist system, if we think about it, with free trade uh among all nations, then you really do need a nation that's the kingpin on top, ensuring that the free trade can happen. Now for a lot of the um the eighteen hundreds, this was uh Britain of course was the was pretty much the world's superpower in for in those years in the eighteen hundreds, and they had a very strong navy. Uh in those days, Britain actually had a doctrine of they wanted their navy to be as strong as the next two biggest navies um combined. So they wanted to have a very strong navy, and this was um able to um uh they were able to protect these uh the waters so that trade could happen and free trade could happen. So after World War II, Britain's no longer the superpower, and who comes out on top as the superpower in the western part of the world, and of course it's the United States of America. Um and so uh we talked a we talked a little bit about this in our episode on central banking. So if you want to delve a little bit more into this, we're gonna gloss over it really quickly here. But uh capitalism was really established after World War II in nineteen in the uh in um uh the dates escaped me now. It was either 43 or 1943 or 1944. Basically, all the allies met up to decide what they were gonna do for their economic system when the war was over, after it became clear that the war was gonna end in their favor. So they went to a place uh in America called Bretton Woods and they decided on uh on how it was going to work, and they decided that it was gonna be an America-centric system where America, who had all the gold essentially, uh, because everyone had taken out all of these loans to fund their efforts in World War II, and America did a lot of did a lot of lending and they did a lot of selling. So America had a lot of gold, because uh in those days international uh trade was done in gold, it wasn't done in American dollars. So America had a lot of gold. So essentially they said, well, here's what the system is gonna be American dollars uh will be the reserve currency, it's gonna be the currency that everyone holds uh in reserve, which is uh kind of makes sense, does what it says on the tin. And so why would you want to hold you know, you as another country, as another country central bank, why would you want to hold American dollars? Well, uh we will we're gonna tell you that um you as another country, let's say you're France or Britain, if you uh you can redeem your US dollars for the gold in our vaults. Um you and it's $35 equals one ounce. So if France, you at any time, you can keep your American dollars, but whenever you want to trade them in for gold, you can do it. Um and this was actually quite uh quite a good deal because you didn't necessarily have to hold, you know, $100 notes. Um what you could do is you could buy um United States uh government bonds, treasury bonds, whereby instead of just holding the hundred dollars, you give the hundred dollars to the American government, and they'll give you a piece of paper that says, I will owe you a hundred dollars at a certain date in the future plus interest, essentially. It's an oversimplification. So essentially, you could either trade your $35 in for gold, or you could keep that $35 in a treasury bond and earn interest on it. And go if you had redeemed it for gold, the gold would just be sitting there and it doesn't gain any interest. So this sounded like a really good deal. Um and for a while it held up. And for a while it held up, but you'll have to go listen to the central banking episode to get the rest of the story. But essentially that was the system. And some other very important institutions were set up um in uh post-war, including things like the International Monetary Fund and the World Bank. Um, and these things are very important. So as we did uh in the uh in the last few episodes, um now that we've sort of described a little bit um of what of the hegemony that existed before, we're gonna kind of talk about the good parts about it and also the bad parts about it. Um because um there was uh a lot of good things that came out of this of the hegemony of American uh capitalism and some bad things as well. So America you decided to use this um essentially use this pole position they've got economically, and they decided that they were going to use that power to um enforce uh this idea of capitalism on everybody. On everybody. And and and the good example of that would be the di the demise of the sterling area, which I talked about in the last episode, where essentially Britain had pretty much an exclusive trade. zone within the British Empire trading in the pound sterling and essentially they would give preferences they would give trade preference to the countries in the empire um so they would prefer to trade with with Australia with Canada with South Africa etc um but now that now that World War II was over and America is the boss of the economy in this new system um based around the American dollar they said no no Britain you are not you are not allowed to do this whole Sterling area business where you trade with your buddies you have to open up trade to everybody on equal terms so the sterling area in that sense fell apart because they weren't allowed to essentially weren't allowed to do it anymore. And so you had to open up to everybody to everybody um uh and this was this is very good for America because um when everybody needs your money um to trade it actually creates a lot of demand for your money um which makes your money desirable which makes your money worth more so this was very good for America and this is this was the start of essentially from you know post-World War II to today where America has has had basically unparalleled prosperity because of this sort of quote unquote free lunch of having of the privilege of being the reserve currency. So what were the good parts? Well obviously you all you had to do to s see the good parts of capitalism was to look behind the iron curtain. You only had to look at the communist bloc countries to see that the alternative or what was preached as the main alternative was actually quite dire. There were great famines um w uh in the Soviet Union in those times. Some people say they were purposeful as a but that's another story for another day. But there were great famines um and there was a great sense of um you and you and you I think the biggest tell is that you weren't allowed to leave the communist bloc or at least not very easily um and again people seem to be wanting to jump to the western side of the Iron Curtain. People certainly didn't seem like they were dying or you know attempting to cross into the eastern side of the Iron Curtain. Because of course on the western side they're experiencing this great prosperity in America they called the 1950s the golden age of capitalism and not just in America but even in Australia too this was a good time to be alive it was a good time to have a family it was a good time to buy a house it was a good time to buy an Australian made car. They were handing out a lot of money to Western European countries to help them rebuild after the war. And that would not be possible if America hadn't achieved that hegemonic position that they had before so that was part of the uh the the good and also uh world trade greased the skids and it allowed us to enjoy um enjoy things imported from other countries that were very positive as well. Japan became an export economy and indeed we got so many interesting and new technologies from the Jap exported from Japan that were that were also very good. Do you remember it we don't do it like this anymore but do you remember like your your dad or your grandparents or something it used to be a big thing to have the big stereo you know the big Sony stereo where all the big black boxes were stacked on top of each other and there was speakers flanking it and there's usually like a record player on top of it and it had like a tap I know my grandparents had one of these and you had like the two the double tape deck and then the record player and then the speakers and the subwoofer like there was a it was um it was a fun time to um it was a fun time to listen to stuff. We don't have it like that anymore. I've just got this Bluetooth speaker which is you know um fits you know you can pick it up with one hand. It's good quality sound but we just don't seem to um you know we just don't seem to do it like that anymore. Anyway. But what about the bad? And you know bef I don't I f I feel as as though I risk coming across as um as you know a communist you know but um I think it's a bit more complicated than that and um it's it just comes to be the case that things that were politically and emotionally charged at some point will just lose that eventually. Because right now this is and this isn't really about the economy this is me going on a tangent but with all of these things with all of these past episodes it's really becoming the case that there are certain things that as I said in the history episode that aren't going to be emotionally charged anymore that aren't going to be politically charged anymore. You know, as I said in that episode that you know Hitler is not isn't Hitler can't be the arch bad guy forever you know Hitler is going to be a historical figure one day that we're gonna look at through historical lenses not with not through founding myth lenses. And I feel that capitalism and communism is one of those founding myths that up until now and up probably not even yet but will be in the future the case that we don't because right now we see that through mythological lenses you know if you say anything it's still the case I think especially with older people if you say something poor about capitalism um you're gonna get accused of being a communist you know being a Stalinist whatever it might be um because and even if you didn't say something pro-communist that you said something is bad about capitalism and because I'm gonna say I'm gonna make criticisms in this episode about capitalism and communism um and it just really has it just really is well it's it's still the case that those are politically charged but the time is going to come when they're not politically charged anymore. You know no one you know what's a what's a good example people don't think of you know Genghis Khan and think oh you can't talk about Genghis Khan he was such a monster he killed all those people no we don't think about Genghis Khan like that because he's a historical figure we look at it through more historical lenses like he did this he did that and I think that's there is a time that coming very soon when that happens to this subject as well and happens to a lot of subjects so I'm not trying to be some sort of you know commie um when I say that let's look about let's look at the bad parts of capitalism and the bad parts of uh post-World War II uh liberalism and starting with um for some countries it was good to be it was good to be capitalist after world war two like America like relatively prosperous countries like Britain like Australia but there were some countries that it wasn't good for um after world war two and to find out why that's the case we need to talk about some of the institutions that were founded after World War II. One of these institutions was the International Monetary Fund or the IMF what the IMF was set up to do was to lend money to developing nations so that it could help them become developed nations um so what they would do is they would lend lend poor nations money but here's the catch is that these poor these poorer nations would have a certain way of doing things but the IMF would enforce a capitalist view of the economy on to this country and basically say that they had to run their economy in an in a in a capitalist way in a neo neoclassical way to have to get the loan. And so this is a good segue into discussing uh more of the but the nuts and bolts of how capitalism uh ought to fun uh was to function in uh the domestic economy now when I talk about capitalism we could use other labels as well um the one label we could use would be neoliberalism but the one I'm gonna use today is uh neoclassical economics um and this is the and I'm gonna use this because this was uh you know neoclassical is more accurately I would say the sort of you know more radical revamped uh capitalist economics of the you know the Ronald Reagan era of the Margaret Thatcher era but certainly um while it wasn't um as advanced um at the at the inception of the capitalist order after World War II it's certainly still a useful label. So neoclassical economics it basic essentially a country ought to run its accounts like a household essentially um because like you and me um as a household you know we have limited money we have limited savings uh we have limited capacity to acquire debt and certainly unlike governments we can't create money out of thin air and because we are in this new Bretton Woods system where we're all using US dollars and US dollars are based on gold essentially it's true that you can't print money under this system because everything is sort of linked back to gold so essentially um these small economies were uh a lot of places you know in Asia and Africa they were not doing so great because they're a developing country and there's just been a worldwide war so they're not doing great so a lot of these countries were doing a lot of government spending to try and relieve the uh hardships and to stimulate the economy but essentially in neoclassical economics what you really need to do is avoid that because that's undisciplined and unprincipled uh in neoclassical economics what you need to do is you need to essentially run the government books like a household and you need to cut spending increase revenue so that you can pay down uh your debts um and so it is said that you know once the government is free of its debts uh finally then we can reach uh prosperity um and so what would happen is the IMF would would um loan money to these countries but the government programs that they were funding whatever it might be would have to stop and I even read of one case was it Mauritius or Madagascar I think in Madagascar after World War II they accepted loans from institutions like the IMF and they had to f they they couldn't continue as they were before they had to follow the neoclassical doctrine of how to run their economy. So in the case of Madagascar they were doing a big government program of malaria immunizations throughout Madagascar and they had to stop because it was too expensive according to the capitalist consensus. And so they stopped they essentially took this money from the IMF to build infrastructure they had to cut their spending raise their taxes the malaria immunization program stopped and people just died of malaria so and it really begs the question is what is what is really the the point or what is really the highest principle? Is it acting as a government for the benefit of people or is it acting to the benef acting uh in line with certain economic principles that we believe are the best. So in that case it really seems like that seems a little bit inhuman that seems not really good that you know you stopped this government the independent government from doing what they think they ought to do so that you you know with essentially a bribe of of money that you were going to give them because the essentially the IMF wanted the money to be paid back and the acceptable way to do that would be to um cut your cut your spending and raise your taxes. And this and this um this actually gave gave birth to a phenomenon which you can google um it's real uh a phenomenon called the IMF riot and essentially as soon as a population of one of these poor countries got got wind that the IMF was coming into their country there would be riots essentially uh because they didn't want the you know they didn't want them to impose this strict um this strict style of capitalism on their country because they were gonna all of these programs are going to be cut. And so that's sort of a poor that's sort of a poor thing that uh aspect to the to the system which people don't really think about because I have had people ask me before um I even even a young man um who when I said I was doing an episode like this said oh well which is better and I thought to myself well really as a net positive or net negative probab definitely capitalism is better but it really depends where you are what time period you're in what job you have because you know if you were get if you were a poor poor tribe in Madagascar dying of malaria you know that's kind of sucky that's kind of bad whereas if you were you know factory worker in 1980s Soviet Union well you know it's not the best not the worst like there's propaganda on the TV and you you can't leave but I mean you got a job you got something to eat you got a place to live is that better than dying with malaria probably but I mean living in Australia in the 19 in the 20th century whatever it might be I mean that's probably better than a lot of them right so it really depends it's really not it's really not that simple. Net positive probably capitalism is is is is was better and definitely it was better because you gotta think that all of the purges and especially the lack of um being able to practice the Christian religion certainly tips the scales in a big way but strictly economically capitalism but it's not that simple and there were there were drawbacks and this is one of them. And so basically this became known as what's called the Washington consensus because all of these of course all of these um institutions were based in Washington DC in America the IMF the World Bank and um the oh not the United Nations I was in New York but pretty close right um and really another another aspect of the poor part of it is um is today is today because we're still living under this system but something seems to have gone a little bit wrong something seems to have gone a little bit wrong um is life really really really wonderful in Australia in America historical standards yes it's probably pretty good it's probably pretty good but something has clearly gone very wrong something has clearly declined because it's not what it used to be it's certainly not what it used to be because the promise of this great capitalist system was that it's gonna bring prosperity it's gonna bring uh you know it's gonna bring uh you know you're gonna have money to spend you know it's gonna bring all of this great stuff but right now it's not it's not when things are not getting better in fact things are getting worse it's getting harder and harder to find a place to live. I hear I hear it say all the time that um that um you know we're one of the richest countries in the world and I just wonder how that's calculated because if if it's if you calculate household wealth including the price of your home then that doesn't really mean anything because home prices are the highest they've ever been but what does that do for me? What is that even if I owned my house and had a huge uh equity in my house, what does that do for me? I can't sell my house because as soon as I sell it I have to buy another one because I've got to live somewhere it really seems that things things are going wrong and it really seems that that capitalism whether it took a wrong turn or it's coming to its logical conclusion has sent us into a place where there are two economies there is the there is the financial economy and there's the real economy and they're running at completely different speeds on paper everything seems to be going really well the stock market's up um you know uh people are richer than they've ever been if you count the value of their home but you know in the real economy it seems that nothing real is happening it's harder than ever to get a house built it's harder than ever to have good infrastructure our you know the roads are always n um got potholes in them and I mean that's not a new development but look at all these new because we need to build all these new houses they need to be built with infrastructure and you know um some of these new estates that they're building aren't getting proper sewer and water they're not being connected to the sewer it's all just going to a tank it's essentially bucket and chuck it all these these new you know they're these developers who you know I don't blame the developers because it's a systemic problem really but the developers they're buying up these old plots of farms and just whacking houses on them but you know the infrastructure doesn't work they can't get it to the sewer so they're just putting it all into a big tank and a truck's coming to pump it out and put it somewhere else it's literally like picking up your poo and putting it somewhere else that's not an advanced that's not what an advanced economy should look like. We shouldn't be bucketing and chucketting. We should be uh you know we should be at least as good as the Romans we should be building aqueducts to take our poo water somewhere else so we don't so we don't have to you know uh you know we don't have to be doing it like that things so things seem to have been going really wrong the stock market's up we're paper wealth is up and indeed banks are doing really well for themselves bank profits are at an all-time high and company profits are being an all-time high but it seems that as soon as it comes down to doing something real not just financial on paper it all breaks down you know because especially you know a company will come out and say that we're laying off 200 employees for example you'd think oh well that's not that's not exactly a good thing is it I'm sure the stock price is going to go down because they're surely on hard times but no you fire 200 people and the stock price goes up because that's just an expense that doesn't have to be met. That doesn't really reflect the real life the real economy you'd think that you would want to inspire confidence by hiring more people and that would make your company worth more but no really it's just it's just a mathematical game of expenses and um and revenues. Something's gone pretty wrong um and if you ask anybody who is trying to move out of home these days you'll know that something is very very very wrong because a lot of people are even struggling to find a a place to live so I as I said in the cold open you can say you can say whatever you want you know you can say that oh you know it was wrong to bail out the banks in 2008 it was wrong to do this you know this isn't how you're supposed to do it but as I said in the cold open this is exactly what communist people say they say real communism hasn't been tried so we can look around and see that this neoclassical capitalist system isn't bringing us a lot of prosperity right now and you can say oh that's because of this it's because of that but realistically if we're being fair what you're saying is real capitalism hasn't been tried and we're just not doing it properly which I don't think is a really convincing argument. And so for the next section we're gonna look about how the economy is going to change going forward because something's got to give because this can't go on. This can't go on. You know, and it just it makes you think like there's a lot of people retiring now. There's a lot of y we all know that the baby boom generation is a large generation, and there's a lot of people retiring. And that and all of those people have to sell their super fund to fund their retirement. And my question is, is if everyone is paying these super high rents and these super high mortgages, they've got no money left over. So my question is, who's gonna buy these super funds? You know, if it you know when you're when you're 65, you're allowed to start selling off your super fund, because your super fund is not a cash pile, it's it's invested on your behalf into stocks and shares and in in bonds and things. And when you get to 65 or whatever the age might be these days, it depends on your birth year, I think. And you have to start you you start selling those assets to fund your living. And my question is people are so people are so strapped, people are so essentially uh strapped for cash. Who's gonna buy these who's gonna buy these assets? Who's gonna buy these shares? So this is a problem that this is a problem that infet that infects everybody. This is a problem for everybody. It's a really a fundamental breakdown of the system. And it's also making people very apathetic. I've heard a lot of people say kids don't want to work. I've heard stories of um you know young Gen Z plumbing apprentices. I've heard that I've heard that, you know, they don't have a great name, you know, they don't show up for work on time, they want a day off, and when the day off doesn't get approved, they just do it anyway. They spit the dummy. And I've heard a lot said people don't want to work. And while I don't think that's honourable, and I wouldn't want to do that myself, you've got to look at the incentives. Because what can the money buy? I've talked about this also in my Tradwife episode, you can give that one a listen. Is when the money can't buy anything, what people aren't going to want to do, you know, people aren't want to go, won't want to go out of their way to get the money. You know, if you can't buy a house, which is the culturally most ingrained thing in us, isn't it? It's the most idyllic thing, have your white picket fence. You know, it's like the castle, the classic film, it's about his home, it's his castle. If home own if home ownership is this thing that's drilled into us, as that really starts your adulthood, and the money can't buy a house, then what are you gonna work why are you gonna work overtime, you know? Why are you gonna bust your gut to get money that can't buy anything? So while I don't think it's honourable, I do understand these plumbing apprentices, because they're probably number one, they're probably just at home playing Fortnite anyway, if they weren't having a job. But also, what's the you know, you have to for something to be a bribe, it has to be worth something. And I think we're finding that you know that that money isn't a good motivator anymore, uh, because you can't buy anything and because the economy's running so hot, like because I work in the construction industry, I work in engineering, and uh it's just been so crazy, it's just been so hyped that people are just getting sick of it. People are saying, I can't do I can't do this anymore. I've been working, I've been working non-stop since 2022. I'm gonna have a heart attack, so I might as well just retire. You know, people uh you know, and there's not you know, this seems to be that there's not enough money to keep people in the job. But anyway, the really really the argument against this really boils down to real capitalism hasn't been tried. And I think that's a poor argument. I think we need to open our minds. I think we need to I think we need to look outside the box. And I've been doing a lot of reading and thinking about economics this past year and a bit, and let me tell you it's been a painful experience because I think it's also something that's very culturally ingrained in us. We grow up, you know, the Russians are the bad guys, you know. We don't want to be a commie, and I still don't, by the way. I don't want people to think that I'm a communist. But we need to expand, we need to expand our horizons outside the traditional neoclassical mould. Uh and for something new. And in the spirit of all of these episodes, that the left and right labels don't really mean anything, conservatism doesn't really mean anything, these labels aren't fit for purpose. It's my opinion that capitalism and communism are not fit for purpose, or at least not anymore. We need to be thinking we need to be thinking of something new. And so what could be the new thing? What is going to change? What is going to be the new thing going forward? Well, we can't tell for sure, but here are some of the things that I think uh might be helpful. Number one is the biggest one. I think one of the biggest ones. And we've talked we've also talked about this on a few other episodes. And I'm gonna talk about three problems that are gonna be resolved. Number one is the problem of land. The problem of land. This is a big problem in Australia, as we know. Land values are insane. Land values are insane, construction costs are pretty insane, but not as insane as land values, and we all know that the new constructions are tip-top quality, aren't they? You know? Of course, they're not. They're gonna break in five to seven years. These new these new townhouses that are going up, they're atrocious. The craftsmanship is awful, everyone's in a rush, the quality is is is not good. But the problem of land, land is so expensive, and we've let it become this way because we don't realize that land doesn't fit in the neoclassical uh idea in the neoclassical system. In neoclassicalism, there are two inputs there is capital and labor. That's the two things you need to make something, anything, whether it's a widget in a factory or whether it's a house on a block of land. Now, if you want to build if you know if you want to build if you want to make widgets, you need capital, which is starts its life as money, you need money to buy the factory, you need money to pay the workers, you need money to buy the raw materials, and the things that though the things that that money can buy is capital, a factory is a form of capital, the raw materials are a form of capital, and you also need labor, you need factory workers to build the widgets, and that is the category of labor. Capital plus labor equals product, it equals productivity. Um but this is this is a fairly uh new concept, I think. I think this is really an error of neoclassical economics because even if you go to the father of of you know capitalism, Adam Smith, Adam Smith recognized that there was actually three categories capital, labor, and land. Land was its own category, or more technically, the rent of lands is its own category. He recognized that land was special, uh, land was finite, um, and land um always demanded a charge for its use in a in a way that nothing else could, uh, because uh the ground that that lives beneath us, um, you whether it's used for a factory, you'll use for farming, whatever it is, it has a yield, and whoever is in charge of that land is able to capture that value in the form of a thing called economic rent. And that's not that's a technical term economic rent. Um, and if you uh couple that with a few other things, that can um make land very expensive. Uh because you want that's the problem of land that we've realized it's we've that we've tucked it away and type made land a form of capital, saying that land is a form of because money can be bought with land, essentially, we say that land is capital. And we say it's just like anything else. It's like a not it's like a it's like a raw material, it's like a factory, it's like money, because you can buy it with money. Land is capital. But he even even capitalists like Adam Smith understood that it's it's fundamentally different because land has a value that can be captured in another way, and to explain that we need to go to our second problem, which is the problem of debt. The problem of debt, because someone whoever is in control of the land is gonna capture the rent of the land, the economic rent of the land. And so, what usually happens is let's say I want to build a factory and the land is owned by someone. I'm gonna say, Can I use this land? And he's gonna say, sure, I'll rent it to you, and so I have to pay that rent to the man who owns the land, or I want to buy the land for myself, in which case I get a loan from the bank, and then I use it, I use the land for whatever the reason is I want it for my factory for whatever it is, and I instead of paying the rent to the man, I pay that economic rent to the bank until it's paid off. Now economic rent is simply is simply um put, is the unearned income in the economy. It's the income that's earned while you're sleeping. Um and it's not necessarily a bad thing, it's not necessarily a good thing, but it is a fact of it's sort of a fact of life that someone's gonna have someone's gonna own the land, and someone's gonna control the land, and someone's gonna capture that rent, whether it's you, whether it's me, whether it's the government, it's this unearned income. But when you put debt into the mix, what you get is speculation. And haven't we experienced this in Australia so much? When you when you and are able to borrow money to purchase land, what you get is uh speculation, is you buy the land in hopes that the value that you're able to sell it for goes up. Because of course, if you if you take out a loan for a million dollars and purchase a piece of land, if you are able to rent it out to somebody and use that rent to pay the interest to the bank so that your in so that your outgoing is zero and your ingoing ingoing is zero, you know, let's say that your repayment is a thousand dollars a month and you can rent it out to Joe Blow for a thousand dollars a month, then what you can do is you can s you can just hold the piece of land for ten years, twenty years, whatever it is, and then at the end of that ten years, you'll find that the land is now worth two million dollars. And so what you can do is you can sell it, and all of a sudden you've made one million dollars, you've captured that power of the land in the capital game. And this is also a very new thing. I don't know if you've read novel like Jane Austen novels like Pride and Prejudice, and if you have, you'll notice that when when all of the when all of the landed gentlemen are at the at the ball, at the party, you know, um vying for these ladies' hand, you know, all of these gentlemen they own a big country house surrounded by lots of farmland, and they don't have to work because they earn, you know, they collect rent and earn income from the farmland. And essentially, you know, when when they say, oh, this is Mr. Darcy, he is very rich, they don't say it's a it's an interesting detail. They don't say, oh, Mr. Darcy's so rich, his estate is worth a billion pounds. Well actually that's a bit of a large number from back then. They don't say, oh, his estate is worth a million pounds. No, they say it's an interesting thing, they say, oh, his estate's worth 10,000 a year. They don't think about the necessarily the value of the estate as in what it could be sold for. They think of the value of the estate as the income it generates every year. Because back then, you couldn't really sell an estate. And that's a generalization, but because there wasn't really all the rich people already had an estate. There wasn't really anyone to buy the estate, and there wasn't any debt to finance the purchase of an estate. So Mr. Darcy couldn't really sell um what's his what's the his estate called in the novel? Pemberley? Is that Pemberley House? You know, Mr. Mr. Darcy can't really sell the Pemberley estate because there's no one to buy it, but he owns it and it brings him £10,000 a year, which it was quite a sum of money back then. But because back then you didn't care, you didn't care so much about the capital gain, and this is very relevant as well to um securities, to shares these days, because this is how we view shares as well, um, is you don't really care about the capital gain because you're never gonna sell it, you care about what it brings you. It used to be the fact that if you bought a share, you bought it because it brings you a dividend. Essentially you're paying $100 for this share and it's gonna it's gonna pay you, you know, five cents a quarter per share or whatever, and you're gonna earn that income over time, and then when you don't need the share anymore, you'll just sell it back for a hundred dollars. That's not how we look at things now. Because as soon as you as soon as you introduce debt to the equation, someone's gonna do the calculation. Okay, well, Mr. Darcy's estate brings in $10,000 a year. If I get a loan for a million pounds, or whatever it might be, £500,000, then I can say, okay, so I need to own it for this many years, and I can get $10,000 this many times, and then I can sell it and make a profit. People are gonna start doing that calculation. But then all it takes is to have two people who want to buy Mr. Darcy's estate, and he can say, Oh well, if I pay a little bit more, if I make my offer a little bit higher, you know, I'm still gonna get that $10,000 a year, but like, you know, you know, there's still a lot of money, and I could I could pay a bit more. And all of a sudden, you bid it up and you bid it up to it to till you get to a place which is today, which is a concept called called, you know, rent is for paying interest. And that's a that's a concept I learned from Michael Hudson. But essentially, you get to a point where rent is for paying interest, and all of a sudden, the person who's gonna win the auction on Mr. Darcy's estate is the person who realizes I can take out a loan. They're gonna borrow as much as possible, you see. They're gonna say I can take out a loan up until the interest payments are equal to the amount that the estate brings in per year. Mr. Darcy's estate brings in £10,000 a year. Therefore, I can afford a loan. I can afford a loan where the repayments are £10,000 a year. So all I need to do is nothing, and I can just wait for other people to bid up the estate even more, so that once I'm finished with Pemberley, I've bought it for a million pounds and I can sell it for two thousand uh two million pounds and make a million pounds profit. And in that sense, instead of Mr. Darcy taking that £10,000 a year to fund his lifestyle, to you know, repair his house, to improve the estate, to maintain the roads and the rivers and pay his staff, instead of doing all of that productive stuff with the £10,000, what you end up with is someone who owns the the estate as a speculation, and that £10,000, instead of going to be spent on the house, instead of going to pay staff, instead of going to maintain roads, that £10,000 goes straight to the bank. And what you'll find is that when people start realizing that they're not making any more land, people are willing to do, people are willing to pay a lot of money to get their hands on land, or rather they're willing to spend a lot of debt to get their hands on land because they realize that the price is going to keep going up because people are going to keep borrowing. And you even get to the point where today people are willing to people are willing to buy residential property in Australia for far more than the rent. People are willing to take out a loan for, let's say, 500 bucks a week, even though the rent's only 400 bucks a week. They're willing to pay into it because they think that the capital gain is going to be so much higher. So we we end up in this space where people are using debt to speculate on and bid up the price of land. And that's the special that's the special property of land. This isn't the case with anything else. This isn't the case for anything else because you need to live somewhere. And land also it is an input for everything. Everything that is made needs land to be made. Because it has to be made somewhere. Unless it's made on the ocean, but that's not really practical right now. And so we come to this place where we realize that land is not just a cap is a piece of capital. Land has a special power to capture value in the form of economic rent that other capital doesn't have. And we also realize that, you know, it doesn't it is that the amount of rent that you can charge from a piece of land is also impacted by things that have nothing to do with you. You know, on Mr. Darcy's estate, there are lots of things that he has to do with. You know, he could be a good landlord, he could have good relationships with his tenant farmers, he could make sure the roads are kept really nicely, that the village pub is always done up nice, that's a good place to be. Those things are all to do with Mr. Darcy, and they all make the estate worth more. But a lot of the things that make the estate worth something have nothing to do with him. The sun that shines on the crops has nothing to do with the landlord. You know, the the water that falls from the sky has nothing to do with the landlord. But the landlord has the privilege of capturing that value. And indeed, you c e greedy landlords, this and this was a problem even back then, is greedy landlords would realize that they could even capture value from from even more things. You know, instead of if the if the people living on the estate wanted to go and fish in the river, the landlord realized that, well, there's only one gate to get to the river. So if I put a toll booth on that gate, then I can charge people money to go and fish in the river, something that they were doing for free. So you really can get quite quite uh extensive with capturing value from the land, even though it's value that had nothing to do with you. And indeed, the way, and this is another reason that property is speculated on today, is essentially you can buy a piece of land further out from the city, but as long as you wait 20 years, it's gonna skyrocket in value. Because the city is, you know, the the urban sprawl is gonna sprawl out and finally it's gonna get to where your property is, you know, because if you buy a piece of property in the bush, it's not worth anything. But um if someone decides to build a city next to your piece of land, all of a sudden your land's worth a lot. Now, why is it worth a lot? Well, it's not because of you, you know. Um, you know, if you it really turns into this perverse incentive where say you own a building in the city, it kind of creates this perverse incentive where what you could do is you could open a restaurant, or you could open a cinema, or you could open any other sort of business. You could you you know you could open an escape room for all I care about, you could open uh a barber shop, you could do all of these things that would you know improve the community. If you if you live next to, if you live on a street and there's a barber shop, there's a grocery shop, there's a cinema, you know, you'd say, wow, this is a great place to live, right? But and and it's a great place to live because of these other things that other people are doing. And it takes you take on a lot of risk starting a business. You know, you take a lot of risk on starting a barbershop, running a barbershop, starting a cinema, running a cinema. Um, and those things which p other people are taking on risk to do make your life better. But if you think about it, those other things make your home better. They make your home a more desirable place to live. So it creates this perverse incentive, is that let's say in a thought experiment that in the city there's two buildings opposite each other on each side of the street. One of them is bought by uh me, and the other one is brought by Jobby. Let's say Jobby decides to do the hard work and build the cinema and build the barber shop and build the restaurant. All of a sudden, once Jobby has finished taking that great economic risk and going into debt to do these things, Jobby takes on all these risks to start these businesses and build these projects. What happens to my building? Well, my building goes up in in value. Because if I'm selling a building on a street with nothing on it, that's not going to sell for very much. But if I'm selling my plot my plot of land, it doesn't even have to be a building. It can just be an empty plot of land. If I'm selling my empty plot of land, what am I going to put on the advertisement? Great location, lots of facilities nearby, and all of a sudden my plot of land is going up in value because of something somebody else has done. And this is what we're going to see coming into the Olympics is the government is spending lots of money on infrastructure. You know, they're spending money on train lines and all this. But, you know, if your house is next to the train, that could be a great selling point. Oh wow, it's so easy to commute, you're right next to the train. That would make that property worth more money. But the but where does that money come from? And it was actually a book written by a New Zealand uh immigrant uh to to London, um man called Don Riley. He wrote this book called Taken for a Ride because he owned a lot of um he owned a lot of property uh in London, in the south of London, and in those days in the 90s or the 2000s, I think it was, they they unveiled this they were gonna do this big tube line extension. It's called the Jubilee line. They were extending the Jubilee line all the way into South London and across and it was gonna service so many more people. And what this man noticed, what Don noticed, is that his properties were going up in value, and because his properties were next to the were next to the locations where they were building the new tube stations. And he only put two and two together when he looked out his window and he saw the workers, you know, with their pickaxes, or probably they're not pickaxes, I guess, but you know, he saw the workers digging the tunnels for the new tube station. And he and he also saw that his property values were going up, and he realized, oh my goodness, the sw the blood, sweat, and tears these workmen are putting in down there, the value that they're putting in is being captured on my balance sheet up here, and I'm not doing anything. And so this is just a fact of life, and I mean like there are many ways that that we could um you know that we could resolve this issue, whether we tax those gains away to be to be um used um to fund government projects or whether we impose certain obligations on people who capture the value of the land. But this is just a fundamental fact of life that we need to recognize. And we're not gonna fix we're not gonna fix this, we're not gonna fix the problem of speculation if we don't realize that we have a problem. Because this is what people are doing. People are and I don't blame the people doing it. If you have an investment property, you're just playing the game. I'm not I'm not getting up people who have investment properties, but this is what people are doing, whether they know it or not, is that they're using debt to speculate on properties to hope that they go up in value. And the going up in value has nothing to do with them, but it has everything to do with either government money printing or people building other things, other infrastructure that is adding to the value of that property. And right now, we've first of all we don't we don't recognize that land captures this special value. We don't we don't recognize that it even does this. So, how are we going to be able to recognize that we need to do something about this? And I think that this is going to be the main sticking point of the new economic system is that something has to be done about the capturing of economic rent, and something needs to be done about the problem of speculation. Because here's what what basically what happens in capitalism is it's a free ride, essentially. Capturing economic rent is a free ride. I can even think of, you know, and it's smart. Again, I'm not getting annoyed at these people, they're very smart and very patient in a lot of cases. I remember near my house, you know, guys who are local Todd's Road, you remember that big tract of land on Todd's Road. Sat there vacant for ages and ages and ages. My whole childhood, 20 years, it sat there vacant. But as soon as the housing boom started, as soon as people started moving further out, because it used to be a fairly rural part in the grand scheme of things, fairly rural, but now that the sprawl has taken effect, they're building the shopping centres, they're building all this other stuff, as soon as the urban sprawl catches up and the city comes to you, that price of that that land probably skyrocketed, and then they sold it, then they developed it to capture that value that had nothing to do with them. Very patient. I gotta I gotta I gotta give it to them. Very patient. It's a very patient investment if you wait 20 years for your investment to pay off. So I do appreciate that. Well, there is one school of economics called Georgist Economics, based from a guy called Henry George, who was an American uh journalist. And he realized the problem of economic rent all the way back in the 1800s, when he realized that people were gonna people were gonna speculate land to oblivion. But no one really no one really took note of the of him because the problem didn't really start taking off because what happened in America is compared to you know compared to Europe, America is huge. It's got heaps and heaps of land. And in America, it was very, very easy to get land. If you were a craftsman in in England, there was almost no hope of you getting any land. Because in England, I don't know if you know this, there's almost zero natural forests left in England. I'm pretty sure actually, not almost, but actually zero. Even the countryside of England has been cultivated and made to look like that because it's just such a it's been inhabited for so long, and there's so little land compared to the amount of people that all the land is used up, it's almost impossible to get hold of land if you're not born into it. But what the what they realize is we can move to America. In America there's heaps of land. It was easy to immigrate to America, and after being there for a few years, you were able to get land for very, very cheap, and some in in some cases for free, because they were all about moving westward, expanding, settling the land, and you could get land for dirt cheap prices. So no one was speculation was a thing, and it was hated by the way, like gangs of people would show up to the auction to like like basically like rough up the speculators so that the genuine farmers could buy the land. So speculation was a thing, but it wasn't a huge problem because they weren't, you know, in the in the early 1800s, 1810s, like they weren't actually sure if they were ever gonna run out of land. There was just so much land that they're like, well, is it ever gonna end? And it was gonna end. It was eventually gonna end. And in Henry George's day, California had been settled, the land was beginning to get settled, and so he was like, We're gonna run out of land, and people are gonna start beating it up and speculating on it. But no one took heed of Henry George because of one fact, which was that the locomotive was invented and railways were starting to be installed, and essentially the locomotives, the trains for the non-autists out there, um, and the railroads opened up so much more land for practical use because land that used to be hours and hours and hours away from the next population center all of a sudden was now one hour away because you could get on the train and you could get to the next place very, very quickly. So essentially, you know, they didn't create more land, but the railroads opened up more land for practical use. So people really saw that the problem kind of just went away with the advent of the railroad. So we're just gonna ignore Henry George. But Henry George's idea was you need you don't need any tax, you know, you don't we have a lot of taxes, guys. We don't need income tax, we don't need anything like that. We need one tax, and it's called the land value tax. Essentially, what you're gonna do is you're gonna is if the price of the land goes up, that value goes up, you're gonna tax it. We have a we kind of have a system a little bit like this in Australia with council rates, but not to a uh huge extent. And his idea was that what the reason you would do this is that nobody would want to speculate anymore. Uh people wouldn't want to speculate because that value that you were capturing is being taxed away anyway. And in this sense, um the that the prices of the properties wouldn't rise as fast because people know that any gain is going to be taxed. And there are places in the world which have tried this successfully, one of them is uh Denmark actually. Um and this land value, rather than being some sort of you know, commie redistribution scheme, that that the government can use the land value tax, can use this money to fund, you know, essential services that the government needs to perform, like defending the country with an army, you know, building roads, building this, that, and the other. Um so that's that's one idea of doing it would be a land value tax. And the other there's one other option, and it's a little bit more radical, and I think that is looking back to Mr. Darcy's estate. The landed gentleman is one of the least understood and most derided things, I think, in the modern day. When we think of the landed gentleman, we think of oh, this posh top hat wearing Tory guy, you know, he's got a st he's stuck up and he's proud and he's posh and he doesn't work because he's a gentleman, and you know, he's got all these servants that are basically his slaves, and he's got a valet to put his underwear on for him, and you know, he's got a maid to cook his cup of tea or whatever. We seem to have this very negative view of the landed gentleman. But what we don't see is that the landed gentleman who owned a large estate had a whole lot of responsibility for what went on in the estate. And he essentially was responsible for for everything that went on in the estate, and he was responsible for a lot of people. Um, these estates employed many, many, many, many people. And really, compared to modern day rich people, you know, like your Elon Musk's and your Bill Gates of the world, landed gentlemen per unit of wealth, let's say, they employed many, many more people per unit of wealth than did Elon Musk. Elon Musk is worth a trillion dollars almost. He's not quite there yet, but almost a trillion dollars. One of his best known companies is Tesla. So Elon Musk owns 15.2% of Tesla. Now, Tesla is worth about $1.29 trillion. So for Elon's 15% uh share of Tesla gives him, and this is not taking into account his other um his other forms of wealth, of which there are many in large amounts at that, Elon's share of Tesla is worth about $169 billion. I looked at a country estate in England that um that still operates and that is still around, so I looked at the Duke of Devonshire, who um is still a Duke, a non-royal duke, which is uh which is a thing, uh, by the way, and their main seat is the uh is called Chatsworth House. It's a it's a lovely country house um with a big uh estate. Now, even though even though agriculture is not as uh profitable as it once was, um Chatsworth House um and the estate still employs about 300 people. Um now the the Duke of Devonshire is worth about 900 million pounds, uh which is about a million US dollars for for um for comparison. So the Duke of Devonshire for his 1 billion dollars of wealth employs 300 people. But how does that actually compare to like a modern rich person like Elon Musk? Well, Elon Musk's uh Tesla employs uh around uh 350,000 people, uh but Tesla um Elon's sh so Elon owns 15% of Tesla, um, which is one point nine sion. So Elon's share of the wealth if you divide uh the employees by Elon's share of Tesla, Elon's $1.96 billion of wealth is employing about 20 and a half thousand employees, and so one point nine sion is still a lot. So if we divide that again to make it to make that employees per billion dollars of wealth, per 1 billion dollars of wealth, Elon at Tesla is employing about a hundred people, while the Duke of Devonshire for his one billion dollars is employing about three hundred people. So but we seem to s but we seem to have this idea that you know the you know English aristocrat, the English gentleman is getting a free ride and is not you know doing anything for society when really when you run the numbers he's actually employing a lot more people. He's in he's redistributing a lot more well uh wealth to to other people than is Elon Musk through Tesla. In fact, the Duke of Devonshire is employing more people by a factor of three uh three hundred percent, which is which is quite a lot. So my what is what is my actual point? My actual point is that the landed gentleman had a certain amount of responsibility legally and socially, an amount of responsibility for the people who lived and worked in his house and his estate. And here's what I think whether it's a whether it's a landed gentry, whether it's a land value tax, here's what I think. The the p whoever it is, the person who captures the economic rent should be responsible for the common good. Let me just say that again. The person who captures the economic rent should be responsible for the common goods. Whether that is the government who taxes away the economic rent, the government should be responsible to use that money to build the roads, to fund the defense of the borders, to um to fund uh, you know, to fund Medicare, to fund uh salaries of uh the public service, to to fund all these things. If it is the case that the you know, Mr. Darcy, the landed gentry, are capturing the economic rent, then they should be responsible for the public goods, which in a lot of ways um they were. Um they had uh an estate which they were in charge of, and they were responsible for making sure the village was was looking nice. They were responsible for maintaining the roads on the estate, they were responsible for employing people in their house and um and and um letting out their making and ensuring that the farmland was kept well by the tenants. And I would also make the argument that if you if your family's owned something for a thousand years, you're gonna have a little bit of an interest in keeping it nice. You're gonna have a bit of an interest in keeping it keeping it well with a long time preference. Um so do I have a solution for you? I usually like to come with solutions, but my solution is I don't really necessarily have a solution, but I think that if we're gonna go in the right direction, if we're gonna go in a good direction, that whoever is capturing this economic rent should be responsible for the public good. Right now, it's the opposite. Right now, the people who capture the economic rent get a tax break so that they get to keep more of it, um, which is totally the opposite of I'm not gonna make a necessarily make a moral judgment about it, but really if you want to have a good economy, this isn't the way to go. Because you're incentivizing people to um speculate on land rather than start businesses, which uh or you know, or build houses, people just buy existing houses, you know, it's not incentivizing people to participate in the economy in a productive way, and you know, uh because you know land speculation, real estate speculation is not productive, it doesn't produce anything. And I've I've heard a lot of people say that to argue that it is, but I just don't think that's a very coherent argument. Buying buying a house that exists and then it still exists, like it's not producing anything, it's not adding anything to the economy necessarily. All it's doing is bidding the price up. So that's my little life after capitalism. What is this new system gonna be called? I don't know. It's yet to be named, it's yet to be discovered, and it's yet to be named. So if you've got any name suggestions, uh put it down in the comments. But the the point being that the old capitalism, communism divide is is coming to a close. It's not really relevant anymore. Um whatever it well, both capitalism and communism. Well, communism happened first, I think because it was worse in a lot of ways. Communism has collapsed first, but capitalism is not looking too good either. So I think on the other side of this we're gonna be coming up with something else. Um so let me know what you guys think. Um do you think capitalism can keep ongoing? Do you think um we should be able to capture economic rent? You know, do you think banks should be a thing? Let me know. And um I hope you enjoyed this episode and um I hope to hope that you enjoyed it, and um I hope that you'll stick around for the next one. Good night.