You're All A Bunch Of Socialists

Summary

Part Of The Problem – Episode Summary

Episode Title: "You're All A Bunch Of Socialists"

Host: Dave Smith (solo episode)
Date: July 2, 2026
Duration: ~65 minutes (main content begins at 01:05)

Overview

In this solo episode, Dave Smith dives deep into the state of American economic discourse, critiquing the growing popularity of both “democratic socialism” on the left and “developmentalism” or economic interventionism on the right. Using recent remarks by Vice President J.D. Vance as a springboard, Dave argues for the enduring value and practical necessity of laissez-faire free markets, as understood in the Austrian economics tradition of Ludwig von Mises and Murray Rothbard. He contends that both major political parties and most public intellectuals, knowingly or not, have embraced big-government economics—with disastrous long-term consequences. The core thesis: true prosperity and voluntary exchange are only possible in a genuine free market, a vision almost entirely lost in mainstream conversation.

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Key Discussion Points and Insights

1. The Inspiration: J.D. Vance and “American Developmentalism”

• Context: Dave was motivated by a clip of VP J.D. Vance on the Michael Knowles Podcast, in which Vance contrasts Milton Friedman’s laissez-faire approach with Alexander Hamilton’s government-driven economics.
• Clip Summary (13:24–16:30):
  • Vance’s Argument: "American economic policy on the right is now much more Alexander Hamilton than it is Milton Friedman. ... That Hamiltonian tradition is going to dominate American conservative economic thinking for the future. Which is not laissez faire. It's actually much more about ... building the kind of tools, ... infrastructure ... that allow national and native industries to flourish at the expense of a hyper globalized economy."
  • Vance claims this is for the “dignity of the human person,” emphasizing developmental economics as a moral tool.
• Dave’s Reaction:
  • Finds Vance’s statements infuriating and emblematic of a bipartisan embrace of big government and price controls, disguised as concern for “working people.”
  • Critiques the vague, rhetorical nature of Vance’s justification—comparing it to Alexandria Ocasio-Cortez’s platitudes about “dignity for all.”

"Oh, man, I just. There's so much to that rant that I just find infuriating." (16:38)

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2. Historical Perspective: Are We Really a “Laissez-Faire” Nation?

• Dave’s Core Argument:
  • The dominant narrative that America has “tried free markets and failed” is a historical myth.
  • Even during the Reagan era (often invoked as the high point of free-market policy), government spending and intervention increased.
  • The modern U.S. federal government is the largest and most interventionist in history, with runaway deficits and “central banks and giant government budgets.” (24:00)

“It's a historical, just total nonsense that like ... we ever did any of that stuff [laissez-faire policies].” (30:25)

• Timeline Recap (31:13):
  • For much of American history (before the Progressive Era, c.1865-1910), there was:
    • No central bank
    • No income tax
    • Minimal federal regulation or welfare state
    • “The federal government and its citizenry barely interacted.”
  • Now, citizens sacrifice half their income “at the threat of violence” to the federal government (taxation), a revolutionary change.

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3. Why Populist Economic Interventions Fail: The Austrian Perspective

The Subjective Theory of Value

• Labor Theory of Value is Wrong (44:28):
  • Both Adam Smith and Karl Marx built models on the labor theory of value—but Austrian economics revealed value is subjective, not based on labor alone.

    “Value is subjective to you. ... Why is LeBron James paid so much? Because people value that one.” (47:41)

• Desert Island Thought Experiment (36:47, 51:01):
  • On a desert island, immediate needs and scarcity dictate value and economic choices, not government decrees or labor effort.

The Role of Prices and Voluntary Transactions

• How Prices Emerge and Why They Matter (43:02, 50:01):
  • Voluntary exchanges and organic price discovery are essential to economic flourishing.
  • Government interventions—like minimum wage hikes or attempts to cap prices—distort these signals and create scarcity, inefficiency, or outright dysfunction.

“You can only have economic prosperity when you have voluntary economic transactions. You can only have prices when you have voluntary economic transactions.” (58:19)

Example: The Price of Apples

• If apples are abundant, they're cheap; if it’s dangerous to get apples, they’re expensive (50:01–54:23):
  • Politicians legislating lower prices don’t fix scarcity—they “just screw up the system. ... All you've done is screw up the system, and you've screwed up the system now because ... you haven't solved the problem...you distorted the signal.”

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4. The Futility of “Third Way” Economics and Economic Nationalism

• Both left and right populists (AOC, Trump, Vance, Mom Donnie) ultimately call for price or wage controls, industrial planning, or other interventions.
• These approaches—whether called developmentalism, populism, or socialism—are “just a different version of the same damn thing,” doomed to fail for the same reasons as socialism: they try to override the wisdom of decentralized, voluntary exchange.

“All this stuff that J.D. Vance is pushing, that the democratic socialists are pushing, it's all doomed to fail for the exact reasons that socialism is doomed to fail. Literally the exact same reasons.” (64:23)

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5. Memorable Quotes & Moments

• “You're all a bunch of socialists!” (Theme refrained throughout, Dave's characterization of nearly all contemporary political actors.)
• On the win-win reality of voluntary exchange:

  “That's why you're both thanking each other when you make a voluntary transaction. ... It does guarantee that there's at least, within reason, the expectation that both people benefit from a voluntary trade.” (61:49)

• On Price Controls:

  "Has he solved that problem? ... No, obviously you haven't solved the problem, because the problem wasn't that it was a lot of money to get the apple. The problem was that it's very difficult to get." (53:08)

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Timestamps for Important Segments

| Timestamp | Segment/Topic | |----------------|--------------------------------------------------------------| | 01:05 – 02:21 | Show housekeeping, upcoming tour info | | 02:23 – 06:11 | Dave’s libertarian/Austrian economics origin story | | 09:10 – 11:13 | The J.D. Vance problem; regime politics and foreign policy | | 13:24 – 16:30 | J.D. Vance’s “Developmentalist” clip with Michael Knowles | | 16:38 – 18:15 | Dave’s immediate reaction: “You’re all wrong!” | | 19:05 – 24:00 | Historical framing and critique of economic populism | | 24:00 – 30:41 | Federal policy since 2008: runaway spending & no free market | | 31:13 – 33:43 | How small gov’t used to be; myth of “American developmentalism”| | 36:47 – 41:19 | Economics explained: desert island thought experiment | | 43:02 – 44:57 | How prices work, subjective theory of value | | 47:41 – 49:15 | Why some goods are more valued than others | | 50:01 – 54:25 | Price controls: the apple example | | 58:19 – 61:22 | Voluntary vs. coercive transactions; why it matters | | 64:23 – 65:38 | Conclusion, urgency for a new “flag-planting” libertarian |

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Notable Quotes & Their Context

• [16:38] Dave Smith: “There's so much to that rant that I just find infuriating.”
• [24:00] Dave Smith: “The ruling elite ... has also handed us the biggest government in the history of the world. Just saying.”
• [30:25] Dave Smith: “The idea that we ever did any of that stuff [Milton Friedman recommendations] is just not true. It's ahistorical. ... Which year did Ronald Reagan cut spending? Oh, wait, it increased every year.”
• [43:42] Dave Smith: “The study of human beings making choices about things. ... This was the great breakthrough of Austrian economics, was that value is subjective.”
• [51:28] Dave Smith: “As Mises points out, [socialism] is completely unworkable. In a socialist system, you have bureaucrats deciding what the price of everything is.”
• [58:19] Dave Smith: "You can only have economic prosperity when you have voluntary economic transactions. You can only have prices when you have voluntary economic transactions."
• [64:23] Dave Smith: "All this stuff that J.D. Vance is pushing, that the democratic socialists are pushing, it's all doomed to fail for the exact reasons that socialism is doomed to fail. Literally the exact same reasons."

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Tone and Final Thoughts

Dave’s tone throughout is energized—sometimes frustrated, often passionate, and consistently didactic. He clearly believes that the “populist moment” is being co-opted to justify more central planning and government intervention, regardless of which party is in charge. He advocates for a radical re-centering of American economic discourse around genuine free-market principles, arguing that only voluntary exchange and the price mechanism can lead to prosperity—while branding today’s political consensus, left and right, as just different flavors of socialism.

“The true opposite of this, the true… answer for the populist desires is exactly the opposite…” (65:04)

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For Further Reflection

Dave ends by expressing hope that a figure like Thomas Massie will “plant a flag outside of all this hysteria and illiteracy.” Anyone interested in the libertarian perspective, or in a rigorous critique of the economic status quo, will find this episode an impassioned primer on the Austrian school’s case for market freedom—along with a fiery dismissal of all forms of modern interventionism, left or right.

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End of summary

Transcript

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[Rob]

What's up? What's up everybody?

[Dave Smith]

Welcome to a brand new episode of

[Rob]

Part of the Problem.

[Dave Smith]

I'm Dave Smith. I'm solo for this episode. Rob is out out on the road and I'm, 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 or we do get one more members only episode out here because that's.

[Rob]

We do a fourth episode every week

[Dave Smith]

that you can only get if you [e-mail] and you also get the show ad free live, all that stuff. So yeah, 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, we're coming on the road. So Houston, Houston, Texas. Where was the, the other shot? Huntsville, Al.

[Rob]

Houston, Texas.

[Dave Smith]

Huntsville, Alabama. Nashville, Tennessee. Those are our next stops. And then a bunch more comicdavesmith.com for all those tickets. And of course, Rob is out on the road on his own right now. Porch tour.com to go see Robbie the Fire.

[Rob]

Okay, so I want to do an

[Dave Smith]

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. And so I wanted to talk about this. And it was kind of, it was inspired by something that I saw this morning, which was a clip of a comment made by the vice president on the Michael Knowles podcast. Podcast. And 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. There were a few major political victories for Democratic socialists also. I think just over the last year, year and a half, I've, I've talked about several times on the show how I want to talk more about, about economics going forward. It is, it's a, it's 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, for my like. So I got, as, as many of you know, I. I got introduced to libertarianism by Ron Paul in the Ron Paul Giuliani moment, which was in a Republican primary debate in 2007. And 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 US 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, was. 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 and just really was making really strong, coherent arguments.

[Rob]

And then he was this total laissez

[Dave Smith]

faire free market guy also, which I

[Rob]

found kind of interesting.

[Dave Smith]

And then it kind of, you know,

[Rob]

it inspired me to like, you know,

[Dave Smith]

I started reading his books and I quickly got obsessed with the. All this like Austrian economic stuff.

[Rob]

It was a crazy time. You know, it was like, if you

[Dave Smith]

could imagine, I found Ron Paul in the Giuliani moment, which must have been, oh man, this is almost 20 years ago.

[Rob]

So it's.

[Dave Smith]

But this is. That was in, I think. What was it? It must have been the summer of 2007. It's almost 19 years ago. Exactly right now.

[Rob]

And then

[Dave Smith]

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. And 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 a couple months after that where he really broke down the whole, you know, how, how government and Fed policy, you know, created the housing bubble and destroyed it.

[Rob]

Anyway, I got, I got very much

[Dave Smith]

persuaded, I, I read a lot of books about economics and I got very much persuaded that Mises and Rothbard were correct. And so I think, I think Ludwig von Mises is the greatest economist who's ever lived really in, to, in, in my opinion he's like the godfather of real economics. And we'll get into a little bit more about what I mean by all of that.

[Rob]

But anyway, I guess just.

[Dave Smith]

So this is one of the things that's been on my mind is that

[Rob]

like,

[Dave Smith]

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, you know, there's so many issues that say hardcore, hardcore Ron Pauly and libertarian types like me are.

[Rob]

You kind of can't even put into

[Dave Smith]

words how much improvement we've seen culturally

[Rob]

speaking in terms of like where people

[Dave Smith]

are on foreign policy, where people are

[Rob]

on government corruption, the nature of, of government, the nature of the regime that

[Dave Smith]

we live under, understanding of the deep state and the, the shadow government, three letter agencies, conspiracies.

[Rob]

Like people are, you know, like we're

[Dave Smith]

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

[Rob]

know, like our, my, my parents like influenced by like cartoons about how a

[Dave Smith]

bill becomes a law.

[Rob]

My, you know, my generation is like,

[Dave Smith]

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, of war and peace which

[Rob]

is, you know, if you're like a Rothbardian libertarian type, I mean that's a really big deal. These, these were ideas that were right

[Dave Smith]

at the center of, 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, 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. Now we didn't have anything like that back in the day, but at the same time so many of, you know, so many ideas about like free markets and laissez faire economics really have, 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 bit of a platform form these days and so, yeah, I'd really like very much to use it to try to convince people that they should hear at some of these ideas and give this a second or maybe in some cases a first thought.

[Rob]

So anyway, I guess all of that's

[Dave Smith]

on my mind and I think that,

[Rob]

you know, particularly with the, you know, J.D.

[Dave Smith]

vance is in, in a strange way right now and we'll, we'll jump into the clip in a second, but he

[Rob]

has kind of, he's, he's in a strange position. He, JD Vance is kind of like

[Dave Smith]

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, 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, for getting out of the thing that we just got into. It's a strange position to be in now.

[Rob]

A lot of the, a lot of

[Dave Smith]

us agree with getting out of the war in Iran. Obviously the whole thing was disaster. It was stupid to do, let's get out of it as soon as possible. It's cut our losses at this point.

[Rob]

But in a strange way, J.D.

[Dave Smith]

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.

[Rob]

And so anyway, it's just a little bit of an odd situation and it

[Dave Smith]

did, you know, it, it caught my, my eye that he, he made this comment. I think there's, I think it was an intentional thing to do.

[Rob]

J.D.

[Dave Smith]

vance is in a position where, you

[Rob]

know, he is, because he's the vice

[Dave Smith]

president, he is de facto somewhat expected to be the next guy in line we've gotten into before. Why, I think it's quite possible it won't be him and it'll be Rubio. But who is the, the candidate who runs and represents this administration? I think it's possible JD Vance doesn't end up running.

[Rob]

But the fact that he's going out on all this tour kind of indicates that he still would like to try

[Dave Smith]

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.

[Rob]

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[Dave Smith]

All right, let's get back into the show. So JD man 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

[Rob]

who would presumably be leading, you know,

[Dave Smith]

the, the charge against those, those guys also seems to conceit a lot of, concede a lot of, a lot of shared common ground, frankly. But here, let's, let's play the clip and then we'll, we'll spend some time talking about all these, these ideas.

[J.D. Vance]

I mean even things like when the president said a few weeks ago that, you know, yeah, he absolutely wanted to like seize, seize the equity of the AI companies and you know, you're not

[Michael Knowles]

supposed to say that.

[J.D. Vance]

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. Yeah, so like the President has already. And obviously I'm biased, I'm his vice president, but the President has already like completely reordered 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.

[Michael Knowles]

Notice though, 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, you say, well, hold on, I just went from Milton Friedman to Hamilton and to some degree George Washington.

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Right.

[J.D. Vance]

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. And 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 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. But 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, you know, for our friends who are sort of on the more laissez faire side of the American right, and 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 like Being laissez faire in a world where there are Christian guardrails on everything. Yeah. 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.

[Dave Smith]

Oh, 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.

[Rob]

Like, you know, I guess part of

[Dave Smith]

the dynamic with why I, I wanted to do this episode in response to

[Rob]

this is because, you know, look, like,

[Dave Smith]

as I was saying before, it's. Look, I'm not claiming to have figured anything out for myself. I'm. 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. I 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, of hardcore, you know, free market libertarian types, but there's certainly guys, I mean, he's

[Rob]

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.

[Dave Smith]

But obviously Tucker has. Has some views on economics probably that

[Rob]

I would really disagree with.

[Dave Smith]

I know all the guys over at, like, Breaking Points. I love their show. They do a great show, but, man, they all totally disagree. Michael Knowles and J.D. 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

[Rob]

all of this, and, and it's like I'm just. And by the way, I'm quite comfortable

[Dave Smith]

with this, but I will plant my flag here and say, no, you're all wrong. You're all wrong about this. And for like, very clear, obvious reasons. But let's, let's start getting into some of this.

[Rob]

What I'm maybe going to try to do here to some degree is as

[Dave Smith]

best I can, is try to kind

[Rob]

of connect, you know, a bit of,

[Dave Smith]

like, economic theory to the reality here. Kind of like basic economic philosophy stuff, and then connecting it to what we're, what we're actually talking about, or at least connecting kind of my understanding of what Ludwig von Mises and Murray Rothbard's Arguments about this stuff are. And yeah, anyway, so, okay, so number

[Rob]

one, the, the framing here, I would just. Because a lot of this is almost like a tactic. Like, it's like, look, dude, what are

[Dave Smith]

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 gonna, we're. Well, forget Milton Friedman. We're going to be Hamilton.

[Rob]

You know, what's more American than that?

[Dave Smith]

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.

[Rob]

Like the. Literally, it's, it's hard to overstate.

[Dave Smith]

And again, this is not my opinion. This is like objective analysis here.

[Rob]

But it's hard to overstate how dramatically,

[Dave Smith]

radically libertarian the conversation even was that Hamilton was having compared to today.

[Rob]

You're the Articles of Confederation, okay, which

[Dave Smith]

preceded the, the Constitution. This is literally what the founding of the country is.

[Rob]

So when we go.

[Dave Smith]

When we're saying, right, coming up this weekend is the 250th anniversary of the

[Rob]

country, what we're going back to is, is the, the Declaration of Independence. Right? We're celebrating this on July 4,

[Dave Smith]

the ratification of the Declaration of Independence. That's the celebration of it.

[Rob]

Okay, well, the government they formed after

[Dave Smith]

that was the Articles of Confederation. It basically wasn't a central government by today's standards.

[Rob]

Okay, that's, that's the time. And so like, anyway, you're going to invoke that. So let me just, just like decouple

[Dave Smith]

a lot of this spin here. How about we just put this in a mut.

[Rob]

Let's have a starting point and talking specifically to J.D. vance, who is at least attempting to

[Dave Smith]

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, you know, stripes. They're like, hey, these elites are screwing over the regular people. We need a program that helps the people against the elites who have, you know, rigged the thing in their favor, broadly speaking.

[Rob]

And okay, so look, let's just describe

[Dave Smith]

reality for a second. Okay?

[Rob]

The elites, the Epstein class, whatever you want to call them, the people in

[Dave Smith]

charge, policymakers, decision makers in the United

[Rob]

States of America, the people who have given us seven disastrous wars in the

[Dave Smith]

Middle east and banker bailouts and COVID lockdowns and $40 trillion in debt and the most expensive, you know, currency debased America and the biggest cultural and racial and political divides.

[Rob]

And you know, like the ruling elite that has handed us all of that has also handed us the biggest government

[Dave Smith]

in the history of the world.

[Rob]

Just saying. Is it because by the way, because the framing is complete bullshit to essentially go.

[Dave Smith]

It's a way to knock kind of

[Rob]

libertarian, laissez faire, pro free market capitalist

[Dave Smith]

types by going, hey, Milton Friedman, how about real going back to America?

[Rob]

Oh, you mean when the size and

[Dave Smith]

scope of government was a fraction of of the government that Milton Friedman supported under Ronald Reagan. This is a historical, just total nonsense that like. And we'll again, we're going to get into more of this history here.

[Rob]

But the. No, we are, we are going to spend this year.

[Dave Smith]

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.

[Rob]

However you feel about that. Maybe you feel it should be even bigger but do different things or maybe

[Dave Smith]

you it should be about the same size and do different. I'm just saying, objectively speaking, that's what we have right now.

[Rob]

So we. If you remember all of the noises

[Dave Smith]

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 at when, when he signed the first omnibus bill, it was the first spending, but 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. And he signed a couple more and then 2020 happened.

[Rob]

Covid hit.

[Dave Smith]

So of course we had to jack

[Rob]

spending through the roof because it was like a once in 100 year crisis.

[Dave Smith]

You know, we spend more than that this year. Substantially more spending more than we spent at the height of COVID right now.

[Rob]

So the. Anyway, that is the reality of the situation.

[Dave Smith]

The, the, the ruling elite, the policymakers, the decision makers have given us central banks and giant government budgets.

[Rob]

Okay.

[Dave Smith]

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

[Rob]

it's really the thing has spun out

[Dave Smith]

of control particularly in the last 25 years or so.

[Rob]

But where we just bit off way

[Dave Smith]

more than we could chew. We already had bitten off so much more. But at this point, we just have

[Rob]

a government that you absolutely. We absolutely cannot afford. There's no, there's no conceivable way.

[Dave Smith]

All this talks about wealth taxes and all this other stuff you can run. It's like a math equation. Dude, you could go run this.

[Rob]

It's like, if you.

[Dave Smith]

Hold on, I'll. Let me see. I'll. I'll see what AI tells me right now. Okay. Total wealth of all US billionaires. Total wealth of all US billionaires combined is between, according to the AI overview on Google, is between 8.1 and $8.2 trillion.

[Rob]

So in other words, if you confiscated all of the wealth of every single

[Dave Smith]

billionaire in the country, just took it all, not a tax, not their income,

[Rob]

just took all their shit, took everything

[Dave Smith]

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 destroyed your economy. There's literally nothing. Whatever. We could get into some more of this stuff too. But, 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.

[Rob]

There's.

[Dave Smith]

You can't. You cannot tax your way out of this situation. It literally cannot be done. You can't. It doesn't even matter.

[Rob]

You know, if you go back and

[Dave Smith]

you can look again some more of this economic history.

[Rob]

But you would go back and look

[Dave Smith]

at when they had, you know, people. A lot of times lefties, 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.

[Rob]

Oh, yeah, right around the same.

[Dave Smith]

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 the. The scheme, you know, ahead of that game. Okay?

[Rob]

So it's. I, I would start by just, just

[Dave Smith]

pointing this out that that is actually

[Rob]

this moment that we're in where there's

[Dave Smith]

this demand for economic populism does not

[Rob]

come from laissez faire free markets.

[Dave Smith]

It comes from quite the opposite. It comes in a moment when the government's spending $7.5 trillion a year. And of course, because we can't afford

[Rob]

that,

[Dave Smith]

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 the. If you look at the monetary response to the, the 08 crash, so all the rounds of quantitative easing, the QE 1, 2, 3, 4, infinity, all that stuff, if you look at the response to Covid, the monetary response in 2020 and 2021, the.

[Rob]

The amount.

[Dave Smith]

I mean, I. 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, the answer, the economic status

[Rob]

quo of the last.

[Dave Smith]

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. That's been the status quo of the last 20 years.

[Rob]

So just saying, if we're going to

[Dave Smith]

frame a narrative here around anything,

[J.D. Vance]

it's

[Rob]

so much more dishonest and just frankly

[Dave Smith]

inaccurate to be like, oh, what do you, you, what a Milton Friedman, this

[Rob]

laissez faire thing, you know, it's just not. Look, it's just not the case.

[Dave Smith]

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.

[Rob]

So, okay, so our guys.

[Dave Smith]

Ludwig von Mises. Ludwig von Mises. Let me see if I get all the details of this right.

[Rob]

But essentially.

[Dave Smith]

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.

[Shopify Advertiser]

He.

[Dave Smith]

So Rothbard was his student also.

[Rob]

I don't know exactly was he his student, but Hayek was.

[Dave Smith]

Well, Hayek, I believe, said that the Mises is what converted him from being a socialist into being a free market advocate. Okay, so get a huge influence. 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 work or continuation of Mises work.

[Rob]

But then Milton Friedman was, you know,

[Dave Smith]

like a hi guy, more so.

[Rob]

Anyway, I'm just making the point that

[Dave Smith]

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.

[Rob]

And it's like we never even did

[Dave Smith]

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.

[Rob]

But the idea that we ever did any of that stuff is just not true. It's ahistorical. 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.

[Dave Smith]

And so.

[Rob]

And part of the thing that's so

[Dave Smith]

dishonest here about this framing is that,

[Rob]

look, again, this is just objectively, this

[Dave Smith]

is the history of America. Anyone can look this stuff up.

[Rob]

But between. So America, the US Federal government currently

[Dave Smith]

is the most powerful, biggest government in the history of the world, as we said, spending $7.5 trillion before the.

[Rob]

The Progressive Era.

[Dave Smith]

So this is before the. The early part of the 20th century.

[Rob]

So it say.

[Dave Smith]

Let's just say from before Woodrow Wilson's presidency. So say from 1865 to 1910 in America, there was no central bank. There was no income tax. There was no federal spending of any meaningful amount.

[Rob]

There was no federal regulation.

[Dave Smith]

None of this stuff existed.

[Rob]

There was no New Deal. There was no Great Society. There were no entitlement programs. There was no welfare state. There was just the. The federal government and its citizenry barely interacted. You didn't even have a relationship with the federal government in the way any

[Dave Smith]

of us do now.

[Rob]

American citizens did not live in a world where they opened their books and paid half of their income at the

[Dave Smith]

threat of violence to their federal government.

[J.D. Vance]

Every year.

[Rob]

This is a different. It's a revolution and the like. Again, I don't know exactly where you would rank it. I mean, America, the American government, was

[Dave Smith]

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

[Rob]

is about this big and if you're talking about that even the 1980s, the

[Dave Smith]

government is about this big.

[Rob]

That's just the reality. And so trying to like spin it

[Dave Smith]

as like, well, we're not going back to the 80s, we're going even more hardcore America than that. I mean, again, like, like, let's be objective here. Alexander Hamilton believed in economic development. Okay, that's kind of vague, J.D. vance, for you to have the economy that Alexander Hamilton had right now, literally

[Rob]

to implement Alexander Hamilton's program, his economic program, What I would have to do

[Dave Smith]

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 and 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, maybe we'll keep a little income tax, but nothing like the IRS that we got now.

[Rob]

Anyway, my point is you're going to hack up a lot of this government,

[Dave Smith]

actually you're going to move in a

[Rob]

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 that was on one of those late night shows. And you know how all those late

[Dave Smith]

night guys are exactly the same, so it's hard to remember.

[Rob]

But. 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 blah, something like that. And then it gets a huge like, applause and I gotta say, like as.

[Dave Smith]

And then of course our response is just to mock it as any person with a modicum of, of common sense

[Rob]

would, because it's like, well, what are you saying?

[Dave Smith]

It doesn't mean anything. I'm for dignity too.

[Rob]

Okay? But I gotta say, J.D. vance maybe has a slightly higher, you know, verbal IQ and he might sound

[Dave Smith]

a little bit better talking to Michael Knowles.

[Rob]

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.

[Dave Smith]

Oh, auto economic System shouldn't serve people

[Rob]

or, or people shouldn't serve economic systems. Systems should serve people. We need economic development. We need whatever a plan in today's world. Then. And then his, his weird comments about we used to have Christian kind of

[Dave Smith]

guard rails and you're like, yeah, and

[Rob]

then government programs destroyed them because that's their competition. But anyway, this is.

[Dave Smith]

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.

[Rob]

But it's like, look man, you're either

[Dave Smith]

going to have more government intervention into the economy or you're not.

[Rob]

There are.

[Dave Smith]

Now I, there are obviously different forms of government intervention. Obviously some are worse than others and.

[Rob]

But there are.

[Dave Smith]

And this is why I just will be firmly planted in the Austrian economics camp unless someone can tackle any of these arguments. I have yet to find anyone who can again.

[Rob]

But look, when I say, let me

[Dave Smith]

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 JD Vance is,

[Rob]

is laying this out, but to just lay a little bit of what I

[Dave Smith]

view as, as how to understand economics, as I said before, influenced by Mises and Rothbard and these guys who I'm

[Rob]

not really smart enough to fully understand,

[Dave Smith]

but I'm smart enough to kind of get the gist of it and maybe decent enough to explain it to some other people.

[Rob]

But if you think about. Okay, so let's just start like most basic economic.

[Dave Smith]

This is kind of like how I think you should almost like start to conceive of, of economics. I'm not good enough to teach a one or one on one class.

[Rob]

But I would say this to start. Think of it.

[Dave Smith]

Start with 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. And it has to be in like, I guess it has, it has to be in real life, hypothetical.

[Rob]

So like in other words, if you're

[Dave Smith]

in the Garden of Eden, you don't have economics in the Garden of Eden. If you know, you can imagine you're just on an island and God provides you everything you want. You'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 then 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 immediately like, you can, I think you can deduce like 50% of all economics principles just from one person on a desert island. Because like, right, if you could see, right, right away you're going to get into, and you're going to know this right away when you're on a desert island. You're going to find out that you got work to do, you got a job to do, and you're going to find out that there is a hierarchy of values, that that time preference is a major factor. You're already going to be, you know, transforming. You know, you're going to look around and be like, hey, I have nature. I have, there's trees that have, you know, berries on them. There's, there's trees that can be, you know, used for shelter things. I can, I can start working purposefully, like working toward an end to transform natural goods into economic goods.

[Rob]

And so you can see just like

[Dave Smith]

a lot of the principles of economics already start being developed. And one of the things you, you find there is that you have, you have a hierarchy of needs and you have a limit. You have, you have scarce resources, including time, which is scarce.

[Rob]

So in other words, like pretty quickly, like you may be tired, let's say,

[Dave Smith]

and you want to rest, but your need to eat is going to make you work to go, you know, fashion a spear and go try to fish or something like that. Like you're gonna, because this need is more important than that need. Okay, so economics basically starts with people

[Rob]

who are working intentionally for a desired

[Dave Smith]

outcome, mixing their labor with scarce resources, right? So you have like all the starting points and then, and look, we've, we've talked about this before on show, so

[Rob]

I don't want to go like too

[Dave Smith]

in depth with just this stuff.

[Rob]

But if you just get to, what we're going to get to is some

[Dave Smith]

of the stuff we talked about on the last members Only episode. But if you haven't seen it, don't worry about it. I'll quickly cover it.

[Rob]

But what you get to next is

[Dave Smith]

you introduce another person into the island and then you get some other economic principles that come out of it, right? Like you, you can now you can specialize, you can trade things like this.

[Rob]

Now again, trading is beneficial because obviously

[Dave Smith]

the more we can specialize and specialize you know, whatever.

[Rob]

There's.

[Dave Smith]

Some people can be very, very good at building chairs, but they're not very good at hunting.

[Rob]

But the person who builds a chair still needs food. So it's. It.

[Dave Smith]

We can economize now. We can maximize if we have the person who's really good at hunting do the hunting for everyone, and the person who's really good at building chairs built the chairs for everyone, and then we can all specialize. And of course, now you can imagine if you extrapolate this into, like, a modern, advanced economy where, like, it's unbelievable the level of, like, specialization that individuals have. You know, like, you go to somebody who specializes in, like, rotator cuff surgery, you know, and you're like, well, I have a torn, so you won't do other shoulder injuries. But he's the best at doing that one.

[Rob]

Okay, let's. Let's just real quickly, let's introduce money

[Dave Smith]

and then prices, because this is really what it all comes down to. So what currency allows, and it's part of the reasons why currency organically develops in economies is currency. Currency also allows you to. To economize, right? I. Having a store of value is important because as. As I'm sure you figure out, right, like, if I'm. If I'm a farmer or something like that, and I want to buy a bed from you, you may not need chickens, you know, or you may not need eggs, but you need dentistry. And I'm not a dentist. I don't do that. But instead of me having to go to the dentist and be like, hey, will you give this guy dentistry if

[Rob]

I give you eggs? Because he doesn't need eggs.

[Dave Smith]

It's better if we just have one universal store of value so we can all. Trade just accelerates trade, and it allows us to all be much wealthier than we would otherwise be without it.

[Rob]

All right, guys, let's take a moment and thank our sponsor for today's show, which is Sheath, the underwear of legends, longtime sponsor of the Part of the Problem podcast. And the best pair of boxer briefs you'll ever buy. I swear to God, go get one. If you've heard me say this before but haven't, go get yourself a pair of underwear from Sheath Underwear. They're amazing. It's all I ever wear. It's the only underwear I own. Sheath.com longtime sponsors of this show, go get yourself the best pair of boxer briefs you will ever put on your body. Make sure to use the promo code problem. That will get you 20 off your order. Sheath.com. promo code problem 20 off. Support them. Great company, great product.

[Dave Smith]

Let's get back into the show.

[Rob]

Okay.

[Dave Smith]

And then comes prices. Prices are something that are always organically developing, evolving all around us. We all experience this all the time. If any of you have ever sold a house or a car or a bike or whatever, you know, you kind of. It's a dance when you figure out prices, because there's a lot of different information, and then there's also individual will. People get to make choices. This is what Mises was all about. This is what praxeology is all about.

[Shannon Maldonado]

The.

[Dave Smith]

The study of human beings making choices about things. So you. You might go trying to sell a car, and you're like, I hope I can get three grand for it. And then you figure out you can

[Rob]

only get 1700 for it. You wanted three grand, you put it out.

[Dave Smith]

But nobody was willing to voluntarily make

[Rob]

the choice to give you that. And that is information about what those people valued. Now, this was the great breakthrough of

[Dave Smith]

Austrian economics, was that value is subjective. And all of these other economic theories

[Rob]

were just built like.

[Dave Smith]

This is why I say Mises is the. The godfather of real economics is.

[Rob]

Look

[Dave Smith]

again, this isn't even a socialist, capitalist thing.

[Rob]

In fact, I think, well, definitely Karl

[Dave Smith]

Marx and Adam Smith both built their

[Rob]

theory off of the labor theory of value, or at least both subscribe to

[Dave Smith]

the labor theory of value, I'd say. I think Marx is really. It's amazing how much weight there is on top of the labor theory of value for communism and socialism in general. And they're just wrong.

[Rob]

It's just wrong. It's just like. It's. It's in the same way that you

[Dave Smith]

would read like, before they figured out germs, people in Europe used to believe that viruses were caused by the clouds. And then they figured out that was wrong. That was just wrong.

[Rob]

It's just.

[Dave Smith]

It's not even like. There's not even like a debate anymore.

[Rob]

Is it these germ things, or you think it's the clouds?

[Dave Smith]

It's like, no, it's not the clouds. That was wrong. It was a guess. It was an incorrect guess.

[Rob]

Same with the labor theory of value.

[Dave Smith]

That is not.

[Rob]

The labor theory of value essentially argues

[Dave Smith]

that value comes from the labor that was put into it.

[Rob]

And again, I'm not saying Adam Smith or Karl Marx were dumb people. You can kind of understand why someone might have viewed that at the time, because, like, obviously, those two things don't have no relationship, right? Like, you work, and you get paid

[Dave Smith]

for working, and when you work and you produce something that did have something to do with the value being created,

[Rob]

but you should pretty easily be able

[Dave Smith]

to figure out that this just is not scientific. Now, they would. Karl Marx or Adam Smith never would have claimed this to be the case. But it is useful in just disproving

[Rob]

the whole theory, right? If. If you go outside and you lift

[Dave Smith]

up a boulder over your head and drop it, and then you do it again and again and again and again and again, and you do that for 15 hours straight, you've put a lot of labor into something.

[Rob]

You've worked awfully hard, and the value is zero. There is zero value there. So clearly, it's not the labor alone that is creating any value. And there was some of the classical

[Dave Smith]

economists, I think there was one.

[Rob]

I think they called it the. The diamond water paradox or something like that. But, like, so you could say right now,

[Dave Smith]

a diamond ring. If I said, what's more valuable, a diamond ring or a bottle of water, almost anyone with any sense would say, well, the diamond ring is worth a lot more. Let's say that's a $10,000 diamond ring.

[Rob]

That's a $2 bottle of water. But now, let me ask you again. On a desert island, you know, on a desert island, that bottle of water's

[Dave Smith]

value is going to shoot up and the diamond is going to go to damn near zero. I suppose if there's some hope of being rescued and being back in a real economy one day, maybe the diamond has some value, but, like, the water is really much more important.

[Rob]

Okay, so what that kind of shows you is that value is subjective to you. Depending on the place and the circumstances and the timing, you might value other things. Why is it that LeBron James is.

[Dave Smith]

Is, you know, makes whatever $40 million a year or whatever he makes, and

[Rob]

somebody who's, like, the best player at cricket can't even make ten grand a

[Dave Smith]

year in America because people value that one.

[Rob]

People want to go see LeBron. They don't necessarily. Sometimes it feels arbitrary.

[Dave Smith]

Like, sometimes it's not completely arbitrary. The water on a desert island, that's because of a very real human need for survival and for water.

[Rob]

But, like, sometimes it's even just arbitrary people, just like one thing more than the other.

[Dave Smith]

And as we've seen, as you could see, if you just look around anywhere, that is actually how value is. Is generated.

[Rob]

Is this show valuable? I mean, I don't know if. If the people watching think it is, then, yeah.

[Dave Smith]

And if nobody thinks so anymore and everyone stops watching, then it's not.

[Rob]

And in the same way you could, you know, and, and there's lots of

[Dave Smith]

information that you get out of prices and that's really, really important point is

[Rob]

that there's so like for example, even so I remember my father in law

[Dave Smith]

was selling his boat last year and he was like, there's a bad market

[Rob]

to sell a boat.

[Dave Smith]

You know.

[Rob]

Now you might think because it was like an inflationary market, it was a good, it'd be a good time to

[Dave Smith]

sell a boat, you know, because it's a good time to sell a house.

[Rob]

It's not a good time to sell a boat. Why is that? Well, a house is a necessity and a boat's a luxury.

[Dave Smith]

And in high inflation economies, people tend

[Rob]

to cut backs on their, on their luxuries, right? And so like there's information there. Even in a situation where like, oh, maybe you would have thought because it's a high price environment, you'll get a high price for Europe.

[Dave Smith]

Turns out that's not exactly true. And in fact there's this.

[Rob]

So there's just, there's a lot of information that you get.

[Dave Smith]

But like we were saying on the Members Only show the other day, it's

[Rob]

vitally important for a functioning economy, for a healthy economy. Which really means what? It means that people get more of the things that they desire, that people get more of the things that they

[Dave Smith]

are working purposely to try to achieve.

[Rob]

If that is in a sense that

[Dave Smith]

people's subjective values are being met in

[Rob]

order for that to happen.

[Dave Smith]

What you want is that honest pricing system.

[Rob]

That is how nations flourish. This is why socialism doesn't work.

[Dave Smith]

It's also why government intervention doesn't work.

[Rob]

Again, like I said, the example I

[Dave Smith]

used on the Members Only podcast the other day, say you're on a desert island and whatever. I know, forget climate and how likely any of this would be, but there's apple trees all over. It's a whole island of apple trees. So much so that there's just apples on the ground and there's apples everywhere. What's the price of an apple going to be? What's the price of an apple going to be? Okay, very cheap. Very, very cheap. Next to nothing.

[Rob]

Now let's say you're on a desert

[Dave Smith]

island, there's no apples.

[Rob]

And in order to get an apple, someone has to go on this like,

[Dave Smith]

adventure where they risk their life and they have to go on this little rackety boat through very rough waters and the good chance, 50, 50 shot, you're going to die before you come back. With an apple.

[Rob]

What's the price of an apple going to be?

[Dave Smith]

Very, very expensive.

[Rob]

Nobody's going to even think about making that attempt unless you just pay them.

[Dave Smith]

You know, you give someone $10 million, maybe they'll risk their life to go try to get you an apple, but you're not getting it for cheap.

[Rob]

Now, when you're talking about prices, this

[Dave Smith]

is how you have to conceive of this. Okay?

[Rob]

All of this stuff, what JD Vance is talking about, what AOC is talking about, what Mom Donnie is talking about, what Donald Trump is talking about, what all, all of these people are talking

[Dave Smith]

about, price controls of one sort or another.

[Rob]

And essentially, what is socialism other than ultimately price controls on everything? You know, you can conceive of it

[Dave Smith]

in different ways, but that's one of the dynamics. And as, as Mises points out, it's one of the things that makes it completely unworkable. In, in a socialist system, you have bureaucrats deciding what the price of everything is. In a purely socialist system, well, how

[Rob]

are you going to do that? How are you going to decide what

[Dave Smith]

the ratio of a pencil to a helicopter to an apartment ought to cost?

[Rob]

There's a lot of information. Okay, so this is my point. When, when Donald Trump says we should have lower interest rates, he's talking about price controls. He's saying the price of borrowing money should be lower. When AOC says we should have a higher minimum wage, she's talking about price control. She's saying the price, price of labor should be higher. When, whatever, J.D. all of these interventions, they're always about prices. They're always about controlling the price of this. Now, all what I'm saying is this. If you're talking about trying to control prices, what. Think about it like this. In that desert island scenario, if I

[Dave Smith]

were to, if I were to, to come along, I'm a politician now, I say I'm the senator here and I were to come along, and I would

[Rob]

say we have a real problem here

[Dave Smith]

that the price of an apple is extremely high. And, you know, it's good. The problem is we.

[Rob]

The price of an apple is extremely high.

[Dave Smith]

People like apples, they want their apples. And so what I'm going to do

[Rob]

is I'm going to legislate that the price has to be much lower. The price of this apple has to be much lower.

[Dave Smith]

I'm going to make it illegal to charge $10 million, which is what the guy was charging to go risk his life to get you an apple.

[Rob]

Has he solved that problem? Like, think this through for A little bit. Has he solved that problem? Well, I think any rational adult, and this is, by the way, why I love Austrian economics, because they teach you

[Dave Smith]

to think how you're supposed to think about economics.

[Rob]

Well, no, obviously you haven't solved the problem, because the problem wasn't that it was a lot of money to get the apple. The problem was that it's very difficult to get. That's the problem. And it's no easier to get. So in other words, right, like if you went to a desert or you went, let's say you put 100 people

[Dave Smith]

or a thousand people on an island,

[Rob]

now make it a little small economy. If you went there and you said, I'm going to make the price of this artificially cheaper, the price of that artificially cheaper. You haven't done anything to help anybody. All you've done is screw up the system. And you've screwed up the system now because, like, look, in the example where you had to risk your life. Life.

[Dave Smith]

I'm using an extreme example, obviously, to paint a picture.

[Rob]

But if you use the example where you have to risk your life to

[Dave Smith]

go get an apple, and the only people that were willing to do that were the ones who you'd have to

[Rob]

bribe with like $10 million, you know,

[Dave Smith]

make really sweeten the pot to get them to go do that.

[Rob]

Okay, well, let's say I legislate that

[Dave Smith]

you can only charge $10 an apple. What do you think the production of apples went to?

[Rob]

0.

[Dave Smith]

No one's doing it for that.

[Rob]

You just mess things up. This was a sign, it was a signal. It was a piece of information, and you distorted the signal. It didn't change the actual thing. In other words, right, if you want to go help the people in on a desert island, well, you can't print money or legislate price controls. What do you have to do? Roll up your sleeves and work production, that's what. Now if I could go into an economy and double their production, does that help the people? Yes, there's twice as much stuff now. That's what it's about, producing the stuff that improves people's lives. And so this, the whole game of being in. In the look, this is the thing, right? What, what does create a pricing system? As I said before, right? If you go out, we've all been through this. I'm selling my used car. I wanted $3000. I could only get 1400 because I asked people, they had a voluntary choice whether or not they wanted to purchase this, and they chose not to. They chose to put those resources in other places. And they just said all of these different factors being combined, it's not worth it to me. Dude, this goes on every single day with all of us.

[Dave Smith]

We all participate in this.

[Rob]

And it is a kind of magical process. You know, there's.

[Shopify Advertiser]

There.

[Rob]

There are marvels of. Of economics all around us.

[Dave Smith]

You know, as Leonard Reed was the one who made that eye pencil essay famous. I think I first heard it from Milton Friedman, but Rothbard had a version of it, too, but where, you know, they talk about. If you're not familiar with it, it's

[Rob]

like, the idea is that there's, like, a pencil, and if you take a pencil, there's actually no person in the

[Dave Smith]

world who has the knowledge to produce a pencil. And then you, like, really have to

[Rob]

think about it and go through all of it.

[Dave Smith]

And you're like, okay, so the. The pencil has, like, lead or whatever, graphite. And you need. In order to do that, you need to drill it out of the ground. In order to get that, either in order to drill it out of the ground, you got to build these big metal machines. In order to build these big metal machines, you got. And if you actually keep going, like,

[Rob]

you could get to everything that there's

[Dave Smith]

no one in the world who has all of this information or anywhere even close to it. You know, there's so much has to come together to produce a pencil.

[Rob]

Like, it's not just that you have this little thing here that was. Part of it is made from a tree, Part of it is minerals in the ground. It was produced at a factory. The factory things needed to be trucked. You know, these different components all needed to be trucked to one area. Well, in order to have a truck, you got to have rubber for the tires. You got to have an engine. You got to have. There's no one in the world who has the knowledge to bring all of this together. It's done by, like, thousands and thousands of different people all coordinating together. And then you'd say, now at the end of that, what does that cost? What is a pencil? Like, if you. You go, oh, my God, this must be worth, like, a trillion dollars. No, it's like a nickel. It's nothing. You see one on the ground, you don't even think twice about it. But it's amazing. There's not one person in the world who has all of the knowledge to create this thing. And we just walk over it. And then you might ask yourself, so what was it? It must have been a massive program of central Planning a big government department of pencils that was barking out orders and saying you produce the pencils and you ship the graphite and you do that.

[Dave Smith]

Nope.

[Rob]

Purely voluntary, purely decentralized, organic, voluntary relationships. And look, here's the thing, and this is what it all comes down to. You can only have economic prosperity when

[Dave Smith]

you have voluntary economic transactions. You can only have prices when you have voluntary economic transactions.

[Rob]

That's the whole way it works. And there are essentially. Now, again, I'm not saying there's no gray areas here. Try. If you don't completely agree with me as I wrap up here, try not to caricature this, what I'm saying here. But there are. There is a degree to which this is black and white where transactions are either voluntary or they are not. I'm not saying there can't be anything

[Dave Smith]

in a gray area.

[Rob]

But like, broadly speaking, there's a whole

[Dave Smith]

lot of black and white there.

[Rob]

Transactions are voluntary or they are not.

[Dave Smith]

There is a difference between buying something in the store and getting mugged.

[Rob]

And government is an instrument of force. This is also just objective, okay? There are government's interactions with its citizens.

[Dave Smith]

Citizenry are not voluntary. They're forced. You pay your taxes or you go to jail. Okay? You follow the law or you go to jail.

[Rob]

That's the relationship.

[Dave Smith]

And that is, that does not function in a price system.

[Rob]

Like, it doesn't. You don't.

[Dave Smith]

You can't find out any of that information.

[Rob]

And essentially the argument is that's what you want. You want the information. You want the signal to be as

[Dave Smith]

accurate as possible, okay? If you have scarcity of something, if you're.

[Rob]

If your country is not able to produce steel, you actually want steel to be expensive. You want steel to be expensive because that lets you know. There's not a lot of it. It lets entrepreneurs know. Don't make a lot of plans. Don't make a big project based around using a lot of steel, because there isn't that much of it. You know what ends up happening when you. With that signal, oh, we're going to artificially make steel really cheap. Entrepreneurs plan a big project around using a lot of steel. Then they get halfway through and realize they don't have the rest of it. You don't want the signal to be messed up. And you can only have it through voluntarism. Because again, let's say I got a

[Dave Smith]

gun now, it's not a market. And I go, oh, I got a used car, I want $3,000 for it. And I put a gun to Someone's head, give me $3,000, here's my car, okay? I didn't enter the pricing mechanism. I didn't.

[Rob]

That's, you know, and look, when.

[Dave Smith]

And this is a beautiful thing about economics.

[Rob]

And it's just like, this is why

[Dave Smith]

I love this stuff. And I find it so fascinating.

[Rob]

But it's just like that.

[Dave Smith]

Like the pencil example, you know, when

[Rob]

you have Stossel, John Stossel, the great

[Dave Smith]

libertarian TV host, he used to talk about this a lot.

[Rob]

But where you have that. The thank you, thank you moment of business. Like when you leave a store and you both say thank you to each other, which is kind of interesting when you think about it.

[Dave Smith]

You know, like, if you leave a store, if I get milk and I put, you know, $5 down, and. And he goes, okay, give me my change. And he goes, thank you. And I go, thank you.

[Rob]

Because it's kind of interesting because you're

[Dave Smith]

typically the response to thank you would be you're welcome, right? Like, the response to thank you would

[Rob]

be like, oh, you did something for me. If you hold a door for me and I go, thank you. You're welcome.

[Dave Smith]

You don't go thank you, because you.

[Rob]

But what's going on?

[Dave Smith]

And this goes back to the subjective theory of value, the correct theory of

[Rob]

value, which is that essentially it is a win win relationship when people voluntarily trade. But essentially what they're saying in their demonstrated preference is that I value that milk.

[Dave Smith]

Let's say you're buying milk for five bucks. Then I'm saying, I value that milk more than I value this $5 bill in my pocket. And the guy selling the milk is saying, I value the $5 bill in

[Rob]

your pocket more than you, more than I value this milk. That's why you're both thanking each other when you make a voluntary transaction. This is what trade is, right? The it's not that there's a guarantee that it's going to work out for both people. I might get home and realize I'm

[Dave Smith]

not in the mood for milk anymore, right? Okay. There's not a guarantee, but

[Rob]

it does guarantee that there's at least within reason, the expectation that both people will benefit

[Dave Smith]

from a voluntary trade.

[Rob]

I might get home and realize I wasn't in the mood for milk, but more likely I got it because I know I like milk with my coffee in the morning. You know, like, more likely, when. When you have win win transactions, that's how you figure out pricing, the pricing mechanism. By the way, there's a great old anecdote about how the Soviets used to just. I can't remember it right now, but they, one of them admitted that they

[Dave Smith]

used to just cheat and look at the Sears catalog. This is what they would do when they were running a completely socialized system. They'd look at the Sears catalog and

[Rob]

then price things out because that's. Bureaucrats don't know how to decide what prices ought to be. We're always in this dance. Look, every time you go to a store, think about it. What do you, when you buy milk at the store, what do you want

[Dave Smith]

to pay for that?

[Rob]

Sierra, you don't want to pay anything for it. And what does the store owner want from it? I don't know. As much as you're willing to give him. They'd be quite happy if it was a million dollars for a quart of milk. Right?

[Dave Smith]

But what goes on when there's a voluntary system?

[Rob]

Well, they can't charge you a million dollars because you won't buy it. You have the option not to buy it. So, okay, they bring it back.

[Dave Smith]

We're always finding an equilibrium, finding where's

[Rob]

high enough that I can maximize my profits, but low enough that they'll still

[Dave Smith]

keep coming in and buying it from me. That's how it works. But that's not how government transactions work. Much like being mugged, that's not a win win scenario.

[Rob]

You don't say thank you after you

[Dave Smith]

pay your taxes and you don't say thank you after you deal with a government bureaucrat because it's a forced transaction.

[Rob]

So anyway, all you're talking about here is can we, can we use force? Can we use the initiation of violence or the threat thereof to make people wealthier? But that's not how wealth is created. That's not how wealth is created. Wealth is created by people producing and

[Dave Smith]

voluntarily exchanging with each other.

[Rob]

And so all this stuff that J.D. vance is pushing, that the democratic socialists are pushing, it's all doomed to fail for the exact reasons that socialism is doomed to fail. Literally the exact same reasons. Because it's all just a different version of the same. The same damn thing. And it's the opposite of what, I'm sorry, it's. It's just more of what we already have. And the true opposite of this, the true, like,

[Dave Smith]

antithesis of the, the current

[Rob]

regime and the true answer for the populist desires is exactly the opposite of

[Dave Smith]

all of this stuff.

[Rob]

It's, it's central banking and big government and tens of trillions of dollars of debt that's put the American people in the situation we're in now.

[Dave Smith]

And if.

[Rob]

If J.D. vance wants to spin anything as a

[Dave Smith]

return to true Americanism, it ain't more central planning than this. And again, I guess the last thing

[Rob]

I'll just say here is that it's

[Dave Smith]

one more reason why I do hope Thomas Massie runs. Because it is important for someone to play plant a flag outside of all of this economic hysteria and illiteracy.

[Rob]

All right, that's the end of the show for me.

[Dave Smith]

Catch you guys next time. Peace.