Part Of The Problem - You're All A Bunch Of Socialists

Episode Date: July 2, 2026

Dave Smith brings you the latest in politics! On this episode of Part Of The Problem, Dave discusses J.D. Vance's appearance on Michael Knowles' podcast, his misguided comments about the economy, the details of a more Libertarian perspective on economics, and more.Support Our Sponsors:VanMan - https://vanman.shop/DAVESheath - https://sheathunderwear.com use promo code PROBLEMPart Of The Problem is available for early pre-release at https://partoftheproblem.com as well as an exclusive episode on Thursday!PORCH TOUR DATES HERE:https://robbernsteincomedy.com/eventsFind Run Your Mouth here:YouTube - http://youtube.com/@RunYourMouthiTunes - https://podcasts.apple.com/us/podcast/run-your-mouth-podcast/id1211469807Spotify - https://open.spotify.com/show/4ka50RAKTxFTxbtyPP8AHmFollow the show on social media:X:http://x.com/ComicDaveSmithhttp://x.com/RobbieTheFireInstagram:http://instagram.com/theproblemdavesmithhttp://instagram.com/robbiethefire#libertarian See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

What'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, 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 part of the problem.com and you also get the show ad free live All that stuff. So 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 other shot? Huntsville, 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, porch tour.com to go see Robbie the Fire. 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. 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. And 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, 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 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 for my like So I got, as many of you know, 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 U.S. intervention in the Middle East, stuff like that. And 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, 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. And then he was this total laissez-faire free market guy also, which I found kind of interesting. And then it kind of, you know, it inspired me to like, you know, I started reading his books. And I quickly got obsessed with all this like, um, Austrian economic stuff. It was a crazy time. You know, it was like, um, 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, 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. And then, um, 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, you know, Peter Schiff and Ron Paul and these guys had been on record predicting we're blowing up a housing bubble here. And then Tom Woods 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, I got very much persuaded. 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 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. But anyway, I guess just, so this is one of the things that's been on my mind 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. You know, there's so many issues that say hardcore, hardcore Ron Paulian libertarian types like me 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 shadow government,

three-letter agencies, conspiracies, like people are, 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 parents' generation. were like influenced by like cartoons about how a bill becomes a law. My, 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, um, of his whole political program. 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 not gain traction like that. And I am still very much convinced that they're correct. And so I don't know. I guess, you know, I have 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're. they should hear at some of these ideas and give this a second, or maybe in some cases, a first thought. So anyway, I guess all of that's on my mind.

And I think that, you know, particularly with the, you know, J.D. Vance is in a strange way right now. And we'll jump into the clip in a second. But he has kind of, he's in a strange position. He, J.D. 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. 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, a lot of the, a lot of us agree with getting out of the war and around, 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. 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 there's, I think it was an intentional thing to do. J.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. 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 candidate who runs and represents this administration. I think it's possible J.D. Bounce doesn't end up running. 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.

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shop slash Dave. promo code Dave for 15% off your first order. All right, let's get back into the show. So J.D. Mann 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 interesting that the guy who would presumably be leading, you know, the charge against those guys also seems to concede a lot of, a lot of, a lot of shared common ground, frankly. But here, let's play the clip, and then we'll, we'll spend some time. time talking about all of these ideas.

I mean, even things like when the president said a few weeks ago that yeah, he absolutely wanted to like seize the equity of the AI companies. And, you know, you're not supposed to say that. 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 as vice president, but the president has already completely reoriented the conversation towards what you might

call an American developmentalist approach. American economic policy on the right is now much more Alexander Hamilton than it is Milton Friedman. I think that's obviously a good thing. You might disagree, but that's just a normative statement. 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 in the tradition. You said, 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 forward to the past, but I do think fundamentally that Hamiltonian, 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, 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, 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, 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 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. 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? Lazy fare free markets?

Like, you know, I guess part of the dynamic with why I wanted to do this episode in response to this is because, you know, look, like as I was saying before, it's, 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. I understand also that, uh, 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 get it. But obviously, Tucker has some views on economics, probably that I would really disagree with. 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 all of this? 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. You'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, 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 one, the framing here, I would just, because a lot of this is almost like a tactic. Like 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 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 literally it's hard to overstate and 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 you're the articles of confederation okay which preceded the constitution. This is literally what the founding of the country is. So when we go, when we're saying, right, coming up this weekend is the 250th anniversary of the country, what we're going back to is the Declaration of Independence, right? We're celebrating this on

July 4th. The ratification of the Declaration of Independence. That's the celebration of that. 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's the time. And so, like, anyway, you're going to invoke that. So let me just, just to 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 J.D. Vance, who is at least attempting to fill kind of like the right-wing populist lane here. And certainly all of the people. 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. And you go, okay, so look, let's just describe reality for a second, okay? The elites,

The Epstein class, whatever you want to call the, the people in charge, policymakers, 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 COVID lockdowns and 40 trillion dollars in debt and the most 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? Oh, you mean when the size and scope of government was a fraction of the government that Milton Friedman supported under Ronald Reagan. This is a historical, just total nonsense. And we're like, again, we're going to get into more of this history here. But the, 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 up. 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.

I'm just saying, objectively speaking, that's what we have right now. So we, 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 up 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. Let 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. It's pretty more than we spent at the height of COVID right now. Um, so the, anyway, that is the reality of the situation.

The, the ruling elite, the policy makers, the decision makers have given us central banks and giant government budgets. Okay. And, um, 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. Um, because it's really, the thing has spun out of control, particularly, in the last 25 years or so. But 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 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 could 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. 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, whatever you get, it's just 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. There's, 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.

You know, if you go back and you can look again, some more of this economic history, but you could 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 the scheme, you know, ahead of that game. Okay. So it's, 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 comes in a moment when the government's spending $7.5 trillion a year. and of course, because we can't afford that, 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, 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. If 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 2008 before the crash, and it's $7 trillion today.

Well, 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. That'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, it's so much more dishonest and just frankly, inaccurate to be like, oh, what do you, what a, 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 guy who loves Ludwig von Mises. That was 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. Ludo McFan Mises, let me 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.

He, so Rothbard was his student. Also, I don't know exactly was he, his student, but Hayek was, well, Hayek, I believe, said that Mises is what, converted him from being a socialist into being a free market advocate. Okay. So a huge influence. Hayak 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. But then Milton Friedman was, you know, like a Hayek guy.

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. It'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 this wasn't a laissez-faire period in time.

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. As 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 1865 to 1910 in america there was no central bank there was no income tax there was no federal spending of 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. And 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 speak, 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. We're going even more hardcore America than that. I mean, again, 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, 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 EP. 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. 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. But so 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 got to say, like, as, and then, of course, our response is just to mock it, as any person with a modicum 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 kind of say, JD Vance maybe has a slightly higher, you know, verbal IQ, and he might sound a little bit better talking to Michael Moles. 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, economic system shouldn't serve people, or people shouldn't serve economic system.

A system 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. Obviously, some are worse than others. But there are, 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. But look, when I say, let me try it now, if I could, to connect this maybe to, instead of just economic history or my take on the kind of dishonesty and how Jady Vance is laying this out, but to just lay 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. But if you think about, okay, 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 101 class, but I would say this to start. Think of it. Start with what is it, Rousseau 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 to be in real life, hypothetical. So like in other words, if you're in the Garden of Eden, you don't have economics.

In the Garden of Eden, 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 I'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 am I think you can deduce like 50% of all economic principles just from one person on a desert island. Because like right, if you could see 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 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 start working purposefully, like working toward an end to transform natural goods into economic goods. And so you can see just like a lot of the principles of economics already start being developed. And one of the things you find there is that you have a hierarchy of needs and you have a limit, you have, you have scarce resources, including time.

which is scarce. So in other words, like pretty quickly, like you may be tired, let's say, 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 going to, because this need is more important than that need, okay? So economics basically starts with people who are working intentionally for a desired 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 shows, so I don't want to go like too in depth with just this stuff. But if you just get to, what we're going to get to is some 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. But what you get to next is you introduce another person into the island, and then you get some other economic principles that come out of it, right? Like you can, now you can specialize, you can trade things like this. Now, again, trading is beneficial because obviously the more we can specialize and specialize, you know, whatever. Some people can be very, very good at building chairs, but they're not very good at hunting. But the person who builds a chair still needs food. So 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, build 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 tolerance. You won't do other shoulder injuries, but he's the best at doing that one. Okay. Let's just real quickly. Let's introduce money 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

economy. This is currency also allows you to to economize, right? Having a store of value is important because as I'm sure you can figure out, right? Like 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 I give you eggs because he doesn't need eggs? 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. 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 go get one. If you've heard me say this before but haven't, go get yourself a pair of underwear from Sheath underwear.

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Great company. Great product. Let's get back on the show. Okay. And then comes prices. And 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, 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. The study of human beings making choices about things. So you might go trying to sell a car and you're like, I hope I can get three grand for it. Then you figure out you can only get $1,700 for it. You wanted $3,000 you put out, but nobody was willing to voluntarily make the choice to give you that.

And that is information about what those people valued. Now, this was the great breakthrough of Austrian economics, was that value is subjective. And all of these other economic theories were just built. Like, this is why I say Mises is the godfather of real economics is, look, again, this isn't even a socialist capitalist, then. In fact, I think, well, definitely Karl Marx and Adam Smith both built their theory off of the labor theory of value, or at least both subscribe to 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. It's just wrong. It's just like

it's in the same way that you 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 it's just it's not even like there's not even like a debate anywhere where it's really like is it these germ things or you think it's the clouds it's like no it's not the clouds that was wrong it was a guess it was an incorrect guess same with the labor theory of value that is not

The labor theory of value essentially argues that value comes from the labor that was put into it. 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 for working. And when you work and you produce something that did have something to do with the value being created. but you should pretty easily be able to figure out that this just is not scientific. Now, they would, Carl Marx or Adam Smith never would have claimed this to be the case,

but it is useful in just disproving the whole theory, right? If you go outside and you lift up a boulder over your head and drop it, and then you do it again and again and again and again and you do that for 15 hours straight, you've put a lot of labor into something, 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 economists.

I think there was one. I think they called it the diamond water paradox or something like that. But like, so you could say right now 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. 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 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. Okay. So what that kind of shows you is that value is subjective to you. You, depending on the place and the circumstances and the timing, you might value other things. Why is it that LeBron James is, you know, makes whatever, $40 million a year or whatever he makes? And somebody who's like the best player at cricket can't even make 10 grand a year in America. it's because people value that one. People want to go see LeBron.

Sometimes it feels arbitrary. 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. But like sometimes it's even just arbitrary. People just like one thing more than the other. And as we've seen, as you could see, if you just look around anywhere,

that is actually how value is generated. Is this show valuable? I mean, I don't know if the people watch. think it is, then yeah. And if nobody thinks so anymore and everyone stops watching, then it's not. And in the same way you could, you know, and there's lots of information that you get at a prices. And that's a really, really important point. That there's, so like, for example, even, so I remember my father-in-law was selling his boat last year. And he was like, there's a bad market to sell a boat, you know? Now, you might think, because it was like an inflationary

market, it would be a good time to sell a boat, you know, because there's a good time to sell a house. there's not a good time to sell a boat. Why is that? Well, a house is a necessity and a boat's a luxury. And in high inflation economies, people tend to cutbacks 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 you. Turns out that's not exactly true. And in fact, there's this.

So there's just, there's a lot of information that you get. But like we were saying on the members only show the other day, it's 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 are working purposely to try to achieve. If that is, in a sense, that people's subjective values are being met, in order for that to happen, what you want is that honest pricing system. That is how nations flourish.

this is why socialism doesn't work. It's also why government intervention doesn't work. Again, like I said, the example I 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. Now, let's say you're on a desert island. There's no apples. And in order to get an apple, someone has to go on this like adventure where they risk their life and they have to go on this little rackety boat through very rough waters and they're a good chance, 50-50 shot you're going to die before you come back with an apple. What's the price of an apple going to be? Very, very expensive. Nobody's going to even think about making that attempt. And let's just pay them a credit. You know, you give someone $10 million, maybe they'll risk their life to go try to get you an apple.

Apple, but you're not getting it for cheap. Now, when you're talking about prices, this is how you have to conceive of this, okay? All of this stuff, what Jady Vance is talking about, what AOC is talking about, what Mom Donnie is talking about, what Donald Trump is talking about, all of these people are talking about price controls of one sort or another. And essentially, what is socialism other than ultimately price controls on everything? you know, you can conceive of it in different ways, but that's one of the dynamics. And as Mises points out, it's one of the things that makes it completely unworkable.

In a socialist system, you have bureaucrats deciding what the price of everything is in a purely socialist system. Well, how are you going to do that? How are you going to decide what the ratio of a pencil to a helicopter to an apartment ought to cost? There's a lot of information. Okay, so this is my point. 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 of labor should be higher. When whatever, all of these interventions, they're always about prices. They're always about controlling the price of this. Now, what I'm saying is this. If you're talking about trying to control prices, think about it like this. In that desert island scenario, if I were to come along, I'm a politician now. I say, I'm the senator here. And I were to come along and I were saying, we have a real problem here that the price of an apple is extremely high. And, you know, the problem is the price of an apple is extremely high. People like apples. They want their apples. And so what I'm going to do is I'm going to legislate that the price has to be much lower. The price of this apple has to be much lower. 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. Has he solved that problem? 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 to think how you're supposed to think about economics. 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 eye, or you went, let's say you put 100 people or a thousand people on an island 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, I'm using an extreme example, obviously, to paint a picture. But if you use the example where you have to risk your life to go get an apple and the only people, that were willing to do that were the ones who you'd have to bribe of like $10 million, you know, make really sweeten the pot to get him to go do that. Okay, well, let's say I legislate that you can only charge $10 an apple. What do you think the production of apples went to?

Zero. No one's doing it for that. 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 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. 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 the whole game of being in the, look, this is the thing, right?

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 $3,000. I could only get $1,400 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. This goes on every single day. with all of us, we all participate in this, and it is a kind of magical process. You know, there's, there are marvels of economics all around us. 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, you talk about if you're not familiar with it, It's like the idea is that there's like a pencil. And if you take a pencil, there's actually no person in the world who has the knowledge to produce a pencil. And then you like really have to think about it and go through all of it. And you're like, okay, so 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. needed 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. And if you actually keep going, like you could get to everything,

that there's 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. Like it's not just the, 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've got to have rubber for the tires, you got to have an engine, you got to have an engine. 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 just, 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. Nope, 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 you have voluntary economic transactions. You can only have prices when you have voluntary economic transactions. 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 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 in a gray area, but like, broadly speaking, there's a whole lot of black and white there. transactions are voluntary or they are not there is a difference between buying something in the store and getting mugged um and government is an instrument of force this is also just objective okay there are governments interactions with its citizens citizens 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 that's the relationship. And that is, that does not function in a price system. Like it doesn't, you don't, you can't find out any of that information. And essentially the argument is that's what you want. You want the information, you want the signal to be as accurate as possible. Okay. If you have scarcity of something, if your, 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 plants. 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 fuck 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 volunteerism. Because again, let's say I got a 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, that's, you know, and look, when, and this is a beautiful thing about economics, and it's just like, this is why I love this stuff, and I find it so fascinating, but it's just like that, like the pencil example, you know when you have Stossel, John Stossel, the great libertarian TV host, he used to talk about this a lot, but where you have

that, the thank you, thank you moment of business, like when you leave a story, you. 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. You know, like if you leave a store, if I get milk and I put, you know, five dollars down and he goes, okay, they'll be good. Give me my change. And he goes, thank you. And he goes, thank you. Because it's kind of interesting because you're typically the response to thank you would be, you're welcome, right? Like the response to thank you would be like, oh, you did something for me. If you hold a door for me and I go, thank you, you go, you're welcome. You don't go, thank you. Because you, but, What's going on? And this goes back to the subjective theory of value, the correct theory of 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, 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 your pocket 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? 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 not in the mood for milk anymore, right? Okay. There's not a guarantee, but it does guarantee that there's a guarantee that there's a way.

there's at least within reason the expectation that both people will benefit from a voluntary trade. 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 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 one of them admitted that they 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 then price things out because 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. When you buy milk at the store, what do you want to pay for that? 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 court of milk, right?

But what goes on when there's a voluntary system? 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. We're always finding an equilibrium finding where's high enough that I can maximize my profits, but low enough that they'll still 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. You don't say thank you after you pay your taxes. And you don't say thank you after you deal with a government bureaucrat because it's a force transaction. 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 voluntarily exchanging with each other. 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 damn thing. And it's the opposite of what, I'm sorry, it's just more of what we already have. have and the true opposite of this, the true antithesis of the current regime, and the true answer for the populist desires is exactly the opposite of all of this stuff. 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. And if J.D. Vance wants to spin anything as a return to true Americanism, it ain't more central planning than this.

And again, I guess the last thing I'll just say here is that it's one more reason why I do hope Thomas Massey runs, because it is important for someone to plan a flag outside of all of this economic hysteria and illiteracy. All right, that's the end of the show for me. Catch you guys next time. Peace.