You're All A Bunch Of Socialists

0:06What's up? What's up, everybody? Welcome to a brand new episode of Part of the Problem. I'm Dave Smith. I'm solo for this episode. Rob is out on the road, and I'm on a family vacation, but it was taking some time to come talk to you guys. Do apologize. This is the last episode, or the last public episode that will be not in studio from here. So I'll be back next week at the home studio. We do get one more members-only episode out here because we do a fourth episode every week that you can only get if you subscribe at partoftheproblem.com, and you also get the show ad-free, live, all that stuff.

0:51So go support the show if you can. If not, just share the podcast, like, subscribe, all that stuff. All right. So, oh, and yeah, we're coming on the road. So Houston, Houston, Texas. Where was the other shot? Huntsville, Alabama. Houston, Texas. Huntsville, Alabama. Nashville, Tennessee. Those are our next stops. And then a bunch more. ComicDapesmith.com for all those tickets. And of course, Rob is out on the road on his own right now. PorchTour.com to go see Robby the Fire. um okay so i want to do an episode today about economics and you know i told you guys yesterday on the show when i'm on family vacation i get more philosophical um and so i wanted to talk about this and it was kind of it was inspired by something that i saw uh this morning which was a a clip of a comment made by the vice president um on the michael knowles podcast and um it it just got me thinking about a lot of this stuff a little bit of background i guess on just why i wanted maybe even to this was on my mind to do this for today's episode but of course i as i did i talked about last week it's been on my mind that those um there were a few major political victories for democratic socialists um also i think just over the last year year and a half i've talked about several times on the show how i want to talk more about about economics uh going forward it is it's a it's an an interest of mine i think it's a vitally important topic and well i guess quite frankly i feel like we're just really losing the day on this topic you know from my like so i got um as as many of you know i i got introduced to libertarianism by ron paul in the ron paul giuliani moment um which was in a republican primary debate in 2007.

2:50and i really it was the foreign policy stuff that really got me interested you know ron paul's showdown with giuliani was over 9 11 the war in iraq blowback terrorism history of u.s intervention in the middle east stuff like that. And I would, I was already very anti-war. I was like an anti-war leftist at the time. And so I really loved it because not, it was, um, it wasn't just that he was also anti-war. It was like, he was better and more anti-war than any of the leftists I had heard from. Um, and, and just really was making really strong, coherent arguments. And then he was this total laissez-faire free market guy also, which I found kind of interesting.

3:29And then it kind of, um, you know, it would inspire me to like, you know, I started reading his books and I quickly got obsessed with the, all this like Austrian economic stuff. It was a crazy time. You know, it was like, if you could imagine, I found Ron Paul in the Giuliani moment, which must have been, oh man, it's almost 20 years ago. So it's like, but this is, that was in, I think, what was it? It must've been the summer of 2007. It's almost 19 years ago. Exactly right now. And And then the crash, the financial crash came in, what was it, September of 08, right? So it was like a year later after I started getting really interested in Austrian economics, there's like the biggest financial crash in America in 100 years.

4:21And it had been precisely predicted by a bunch of the Austrian economists. like Peter Schiff and Ron Paul and these guys had been on record predicting we're blowing up a housing bubble here. And then Tom Wood's book Meltdown came out like a couple months after that where he really broke down the whole, you know, how government and Fed policy, you know, created the housing bubble and destroyed it. Anyway, I got very much persuaded. I read a lot of books about economics and um i got very much persuaded that uh misus and rothbard were correct um and so i think i think ludwig von misus is the greatest economist who's ever lived um really in to in in my opinion he's like the godfather of real economics um and we'll get into a little bit more about what i mean by all of that but anyway i guess just so this is one of the things that's been on my mind um is that like well okay so from my perspective somebody who's been in this this you know this world or been thinking about these things for the last 20 years about um you know there's so many issues that say hardcore hardcore ron paulian libertarian types like me um are you kind of can't even put into words how much improvement we've seen, culturally speaking, in terms of like where people are on foreign policy, where people are on government corruption, the nature of government, the nature of the regime that we live under, understanding of the deep state and the um the shadow government three-letter agencies conspiracies like people are um you know like we're just people have really woken up for many different reasons about a lot of really important issues and we just live in a completely different world than you know like our my my parents generation were like influenced by like cartoons about how a bill becomes a law.

6:36My, you know, my generation is like, let me see what's in the Epstein files. You know, like, I don't know, there's just, there's a much more realistic understanding about the nature of government, and the nature of war and peace. Which is, you know, if you're like a Rothbardian libertarian type, I mean, that's a really big deal. These were ideas that were right at the center of his whole political program and theory. But at the same time, you know, so so again, so from the perspective of a of like a non interventionist Ron Paul libertarian type, you it's amazing that we got Tucker Carlson and, you know, people whose foreign policy is very, very similar, if not downright identical are some of the biggest, you know, voices in the country.

7:27now we didn't have anything like that um back in the day but at the same time so many of um you know so many ideas about like free markets and laissez-faire uh economics really have uh have not gained traction like that and i am still very much convinced that they're correct and so i don't know i guess i you know i have a a bit of a platform these days and so yeah i'd really like very much to use it to try to convince people that they should uh hear out some of these ideas and give this um a second or maybe in some cases a first thought uh so anyway i guess all of that's um on my mind and i think that you know particularly with the uh you know jd vance is in a strange way right now and we'll jump into the clip in a second but he has kind of um he's he's in a strange position he jd vance is kind of like first off he's been tapped as i've been pointing out it's very reminiscent of kamala harris being chosen to go to the border like here you come be the face of this thing that can't possibly be sold well um but he's essentially been tapped by the regime to be the guy arguing kind of against the regime's decision to launch this war, but while also saying, no, no, no, it was a really good idea, but here's why we all got to be forgetting out of the thing that we just got into.

8:59It's a strange position to be in. Now, a lot of us agree with getting out of the war and around, obviously. The whole thing was a disaster. It was stupid to do. Let's get out of it as soon as possible. It's cut our losses at this point. But in a strange way, J.D. Vance is becoming a very inorganic, top-down, chosen face for the people who want to get out of this war. And of course, he's going to do that while he's like, you know, still praising Trump. And so anyway, it's just a little bit of an odd situation. And it did, you know, it caught my eye that he made this comment. I think it was an intentional thing to do.

9:46J.D. Vance is in a position where, you know, he is, because he's the vice president, he is de facto somewhat expected to be the next guy in line. um we've gotten into before why i think it's quite possible it won't be him and it'll be rubio but uh who is the the candidate who runs and represents this administration i think it's possible jd bounce doesn't end up running um but the fact that he's going out on all this tour kind of indicates that he still would like to try to find a way to and you know generally speaking the rule of thumb is that people who have the opportunity to hold enormous power tend to not give up that opportunity.

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11:38That's vanman.shop slash Dave, promo code Dave for 15 % off your first order. All right, let's get back into the show. So. J.D. Mance makes these comments, and this is in an environment where democratic socialism is kind of on fire on the left. and in a sense you know this is it's it's interesting that the guy who would presumably be leading you know the um the charge against those those guys also seems to concede a lot of concede a lot of um a lot of shared common ground uh frankly but here let's let's play the clip and then we'll we'll spend some time talking about all of this these ideas i mean even things like when the president said a few weeks ago that uh you know yeah he absolutely wanted to like seize seize the equity of the ai companies and you know you're not supposed to say right and it's like guys he's the president and he sets the agenda and he just said it and by the way nobody really even protested.

12:48Yeah. So like the president has already, and obviously I biased, I'm his vice president, but the president has already like completely reoriented the conversation towards what you might call an American developmentalist approach. Like American economic policy on the right is now much more Alexander Hamilton than it is Milton Friedman. Yeah. I think that's obviously a good thing. You might disagree, but that's just a normative statement. Notice what you've just said, because for the people who say that betraying some nostalgic retconning of a caricature of the 1980s, that to change that in any way would be abandoning American history and the tradition.

13:28You say, hold on, I just went from Milton Friedman to Hamilton. And to some degree, George Washington. Right, 200 years backwards in history, actually. That's very much a foundation of American developmental economics and economic policy. And I do think, you know, I don't want to say you can go back to the future or, you know, forward to the past. But I do think fundamentally that Hamiltonian tradition is going to be what we see in the American right and will dominate American conservative economic thinking for the future. Yeah. Which is not laissez-faire. It's actually much more about, you know, building the kind of tools, building the kind of infrastructure that allow human beings to flourish, that allow national and native industries to flourish at the expense of a hyper-globalized economy.

14:17And I think those are the basic principles that are going to carry us into the future. But to me, it's fundamentally about the dignity of the human person. The economy is a tool to service the dignity of the human person. if a set of economic policies make it easier for a person to raise a family, to earn a living wage, to give back to their community, to maybe go to church on Sunday, or to actually spend some leisure time building the kind of life that matters, like that is the sort of thing that we want to be supportive of. Now, obviously, to do those things, you do need economic development.

14:53But if you turn economic development into a sort of idol, then you end up sacrificing a lot of the things that matter most. And I do think that for our friends who are sort of on the more laissez-faire side of the American right, in hindsight, part of why Milton Friedman's ideas made more sense in the 1980s is because they were being advocated in a country that still had a very rich and powerful institutional Christianity. And so being laissez-faire in a world where there are Christian guardrails on everything is a much different proposition than being laissez-faire in a world where globalized liberalism has become the sort of status quo of American elites.

15:40Oh, man. I just, there's so much to that rant that I just find infuriating. And I guess maybe even that comment at the end there where he's like, oh, well, you know, we used to have like christianity that was the guardrail but now all we have is global liberalism it's like yeah global liberalism that wants what laissez-faire free markets like you know i guess part of the dynamic with why i i wanted to do this episode in response to this is because you know look like as i was saying before it's um um look i'm not claiming to have figured anything out for myself. I'm essentially telling you here, I've just read a lot of Mises and Rothbard, and these guys are right, and this stuff is wrong.

16:29I understand also that right now, at least in this moment, it seems like all the cool kids disagree with me. This is obviously, we have our camp of hardcore, you know, free market libertarian types. But there's certainly guys, I mean, he's usually pretty good when I'm in the room with them. And I feel like if I could explain it the right way he'll he'll get it but obviously tucker has has some views on economics probably that i would really disagree with um i know all the guys over at like breaking points i love their show they do a great show uh but man they all totally disagree michael knolls and jd vance here are both on the same page of course we got to be hamiltonians here man what are we going to be milton friedman that republican stuff from the 80s and and all of this and and it's like I'm just, and by the way, I'm quite comfortable with this, but I will plant my flag here and say, no, you're all wrong.

17:22You're all wrong about this. And for like very clear, obvious reasons. But let's start getting into some of this. What I'm maybe going to try to do here to some degree is, as best I can, is try to kind of connect, you know, a bit of like economic theory to the reality here. Kind of like basic economic philosophy stuff and then connecting it to what we're actually talking about. Um, or at least connecting kind of my understanding of what, uh, Ludwig von Mises and Murray Rothbard's arguments about this stuff are. Um, and, uh, yeah, anyway. Uh, so, okay. So number one, the, the framing here, I would just, cause a lot of this is almost like a tactic.

18:06Like, it's like, look, dude, what are we going to be like? Milton Friedman and Ronald Reagan and the establishment of the 1980s or the, the old kind of Republican guard, you know, no, we're going to, well, forget Milton Friedman, we're going to be Hamilton. You know, what's more American than that? Going back to Hamilton versus, you know, invoking kind of Hamilton versus Jefferson debates about whether we should have a central bank or whether we should have like a central government or, you know, by today's standards, almost that would be the debate. Like the, literally it's hard to overstate.

18:42And again, this is not my opinion this is like objective analysis here but it's hard to overstate how dramatically radically libertarian the conversation even was that hamilton was having compared to today i hear the articles of confederation okay which preceded the the constitution um this is literally what the founding of the country is so when we go when we're saying right uh uh coming up uh this weekend is the 250th anniversary of the country what we're going back to is is the the declaration of independence right we're celebrating this on july 4th um the ratification of the declaration of independence that's the celebration of it okay well the government they formed after that was the articles of confederation it basically wasn't a central government by today's standards okay that that's that's the time and so like anyway you're going to invoke that so let me just just like decouple a lot of this spin here how about we just put this in a much let's have a starting point and talking specifically to jd vance who is at least attempting to fill kind of like the right-wing populist lane here and certainly all of the people who i mentioned there many friends of mine on the left and on the right are to some degree economic populists of different stripes.

20:09They're like, hey, these elites are screwing over the regular people. We need a program that helps the people against the elites who have rigged the thing in their favor, broadly speaking. And you go, okay, so look, let's just describe reality for a second, okay? The elites, the Epstein class, whatever you want called the the people in charge policy makers decision makers in the united states of america the people who have given us seven disastrous wars in the middle east and banker bailouts and coveted lockdowns and 40 trillion dollars in debt and the most uh expensive you know currency debased america and the biggest cultural and racial and political divides and you know like the ruling elite that has handed us all of that has also handed us the biggest government in the history of the world just saying is it because by the way this because the framing is complete bullshit to essentially go it's a way to knock kind of libertarian laissez-faire pro-free market capitalist types by going, hey, Milton Friedman, how about real going back to America?

21:28Oh, you mean when the size and scope of government was a fraction of the government that Milton Friedman supported under Ronald Reagan? This is ahistorical, just total nonsense. And again, we're going to get into more of this history here. But no, we're going to spend this year, I think the federal budget is$7.5 trillion. It's the biggest, most interventionist government in human history. That's what the establishment has handed us. However you feel about that. Maybe you feel it should be even bigger, but do different things. Or maybe you think it should be about the same size and do different.

22:05I'm just saying, objectively speaking, that's what we have right now. So if you remember all of the noises that people made complaining about Bush's reckless spending and Obama's reckless spending. And they were correct to be complaining about that at the time. Well, that's been nothing because, you know, Donald Trump upped the spending from Barack Obama. And then in, you know, he said some nice things. If you remember when he signed the first omnibus bill, it was the first spending bill. I think it was an omnibus bill. He said, I'll never sign another one that adds this much to the debt. You know, that's it.

22:39Let me sign a couple more. And then 2020 happened, COVID hit. So of course we had to jack spending through the roof because it was like a once in a hundred year crisis you know we spend more than that this year substantially more spending more than we spent at the height of covet right now um so the anyway that is the reality of the situation the the the ruling elite the policy makers the decision makers have given us central banks and giant government budgets. Okay. And of course, as I've pointed out so many times, I mean, this is at the heart of so many of the problems in the American economy, because it's really the thing has spun out of control, particularly in the last 25 years or so.

23:28But where we just bit off way more than we could chew, we already had bitten off so much more. But at this point, we just have a government that you absolutely we absolutely cannot afford. There's no conceivable way. All this talks about wealth taxes and all this other stuff. You can run. It's like a math equation, dude. You can go run this. It's like if you – hold on. Let me see. I'll see what AI tells me right now, okay? Total wealth of all U.S. billionaires. total wealth of all u.s billionaires combined is between according to the ai overview on google is between 8.1 and 8.2 trillion dollars so in other words if you confiscated all of the wealth of every single billionaire in the country just took it all not a tax not their income just took all their shit took everything they have you could pay for about a year of what our federal government spends so there's no conversation about oh and by the way you don't have billionaires anymore you just completely destroy your economy there's literally nothing like whatever you get into some more of this stuff too but you yeah that would hurt a lot to take all of that money out of the productive economy and it funds it for a year and now we're right back in the mess we're in um there's you can't you cannot tax your way out of this situation um it literally cannot be done you You can't, it doesn't even matter.

24:57You know, if you go back and you can look again, some more of this economic history, but you would go back and look at when they had, you know, people, a lot of times lefties and liberals like to bring up, well, they used to have the top marginal tax rate was 90 % or something. And you're like, okay, now go look at what the effective tax rate was. Oh yeah. Right around the same, right around the same. It's like 34 % or something, you know, you only take so much of people's wealth before they either stop working or they move it around or whatever. And, of course, rich people always are ahead of that game.

25:29OK, so I would start by just pointing this out, that that is actually this moment that we're in where there's this demand for economic populism does not come from laissez-faire free markets. It comes from quite the opposite. it it comes in a moment when the government's spending 7.5 trillion dollars a year and of course because we can't afford that um inflating the currency away at let's say an alarming rate and you can go look at this stuff on charts but if you go through um the if you look at the monetary response to the 08 crash. So all the rounds of quantitative easing, the QE 1, 2, 3, 4, infinity, all that stuff.

26:21If you look at the response to COVID, the monetary response in 2020 and 2021, the amount, I mean, again, you can go look up the exact numbers, but it's something like The Federal Reserve's balance sheet, I think, was a little north or maybe a little south of$800 billion back in 08 before the crash, and it's$7 trillion today. essentially the answer, the economic status quo of the last, what is this now, since 2008, almost 20 years, 18 years, the status quo for the last 20 years has been to flood the market with liquidity. Print money, spend money, more so than has ever been printed and spent in human history.

27:14That's been the status quo of the last 20 years. So just saying, if we're going to frame a narrative here around anything, it's just so much more dishonest and just frankly inaccurate to be like, oh, what do you, Milton Friedman, this laissez-faire thing? You know, it's just not, look, it's just not the case, objectively speaking. This happens to be the world I live in. You're bringing up a libertarian economist i'm you know the the guy who loves ludwig von mises that was our our group in the libertarian party was the mises caucus of the libertarian party because we think this one guy was like the greatest economic genius of all time okay not say that happens to be our camp but let me do my best to try to kind of explain it here but i'm just i'm making the point here simply that when you talk about so okay so our guy is Ludwig von Mises Ludwig von Mises let's see if I get all the details of this right but essentially so Murray Rothbard who basically founded modern libertarianism he was a student of Ludwig von Mises who from my opinion like I said is the godfather of real economics um he so Rothbard was his student also I don't know exactly was he his student but hayek was uh well hayek i believe said that the uh mises is what converted him from being a socialist into being a free market advocate okay so a huge influence hi uh hayek was the guy who won the nobel prize and i believe he won the nobel prize for like work that was derivative of mises's work or continuation of mises's work um but then milton friedman was you know like a Hayek guy more than so anyway I'm just making the point that this happens to be my world like this a lot of people aren't interested in this stuff but he's invoking this here for a reason and it's like we never even did what Milton Friedman said we should do like our camp my guys are like no like Mises and Rothbard are the more like hardcore guys you know to us Hayek and Friedman were a little bit more watered down but the idea that we ever did any of that stuff is just not true.

29:30It's a historical. It's not true. And it's verifiable. You can go check it. Which year did Ronald Reagan cut spending? Oh, wait, it increased every year. Okay. All right. So there was, this wasn't a laissez-faire period in time. And so, and part of the thing that's so dishonest here about this framing is that, look, again, this is just objectively, this is the history of America. Anyone can look this stuff up, but between, so America, the U S federal government currently is the most powerful biggest government in the history of the world we said spending 7.5 trillion dollars before the the progressive era um so this is before uh the um the early part of the 20th century so it say let's just say from before woodrow wilson's presidency so say from From 1865 to 1910 in America, there was no central bank.

30:28There was no income tax. There was no federal spending of any meaningful amount. There was no federal regulation. None of this stuff existed. There was no New Deal. There was no Great Society. There were no entitlement programs. There was no welfare state. There was just the federal government and its citizenry barely interacted. You didn't even have a relationship with the federal government in the way any of us do now. American citizens did not live in a world where they opened their books and paid half of their income at the threat of violence to their federal government every year. It's a different, it's a revolution.

31:10and the like again i don't know exactly where you would rank it i mean america the american government was an experiment in the most restrained government that's ever been created and it is now the biggest most powerful government that's ever been created now i don't know exactly if you'd put a number on that scale or something like that but like relatively speaking if you're talking about the government back then the old american way the government is about this big And if you're talking about even the 1980s, the government is about this big. That's just the reality. And so trying to like spin it as like, well, we're not going back to the 80s.

31:47We're going even more hardcore America than that. I mean, again, like let's be objective here. Alexander Hamilton believed in economic development. OK, that's kind of vague, J.D. Vance. for you to have the economy that Alexander Hamilton had right now, literally, to implement Alexander Hamilton's program, his economic program. What I would have to do right now, okay, well, he's going to keep a central bank of some sort, and he's going to have some degree of economic planning in Washington, D.C., but I am going to have to abolish, well, we're going to have to abolish the Department of Energy and the EPA and the Department of Education in the Department of Health and the Department of Justice and the Department of Homeland Security, the Department of Energy, the income tax, or maybe he was foreign income tax.

32:43Maybe we'll keep a little income tax, but nothing like the IRS that we got now. Anyway, my point is, you're going to hack up a lot of this government, actually. You're going to move in a way closer to laissez-faire direction. And I guess the other frustrating thing about this is that I got to say, as I listened to this clip, it reminded me of a clip that we played on this show years ago of Alexandria Ocasio-Cortez, who was asked, I believe, I want to say it was on Stephen Colbert's show. It was on one of those late night shows. And you know how all those late night guys are exactly the same. So it's hard to remember.

33:23But so she, she was asked what it means to be a democratic socialist. And she said something like being a, to me, being a democratic socialist means that in the richest country in the world, everyone should have dignity and respect and something like that. And then it gets a huge, like applause. And I got to say like, as, and then of course our response is just to mock it as any person with a modicum of of common sense would because it's like well what do you say it doesn't mean anything i'm for dignity too okay but i gotta say jd vance maybe has a slightly higher you know verbal iq and he might sound a little bit better talking to michael mulls but i'm sorry guys just what was all of that other than nothingness it's all nothingness none of this has to do with anything oh i don't economic system shouldn't serve people or people shouldn't serve economic systems.

34:22Systems should serve people. We need economic development. We need whatever, a plan in today's world. And then his weird comments about we used to have Christian kind of guardrails and you're like, yeah, and then government programs destroyed them because that's their competition. But anyway, this is, look, essentially none of this really matters. None of it really gets to the heart of the issue. And this is why I think this stuff is worth fighting about. But it's like, look, man, you're either going to have more government intervention into the economy or you're not. There are now there are obviously different forms of government intervention.

35:03Obviously, some are worse than others. And but there are and this is why I just will be firmly planted in the Austrian economics camp And unless someone can tackle any of these arguments, I have yet to find anyone who can. But look, when I say, let me try now, if I could, to connect this maybe to instead of just economic history or my take on the kind of dishonesty and how J.D. Vance is laying this out, but to just lay out a little bit of what I view as how to understand economics, as I said before, influenced by Mises and Rothbard and these guys. So I'm not really smart enough to fully understand, but I'm smart enough to kind of get the gist of it and maybe decent enough to explain it to some other people.

35:50But if you think about. OK, so let's just start like most basic economic. This is kind of like how I think you should almost like start to conceive of economics. I'm not good enough to teach a one or one on one class, but I would say this to start. um think about start with uh what is it russo on the desert island or however they would do desert island one person just one person start with okay so one person on a desert island um and it has to be in like um i guess it has it has to be in real life hypothetical so like in other words you if you're in the garden of eden you don't have economics uh in the garden of eden if You know, you can imagine you're just on an island and God provides you everything you want.

36:38You're just like in this beautiful area. If you want something, all you have to do is ask God and he'll give it to you. Well, there's no such thing as economics, really, because there's no scarcity. I don't even think there's really scarcity in time. Right. It's just foreverness in the Garden of Eden. However, if you, listener, you just end up in real life on a desert island somewhere, economics starts immediately because immediately you got stuff to do. and you'll recognize that right away. And so what would it mean? Like you can, I think you can deduce like 50 % of all economic principles just from one person on a desert island.