The David Knight Show - INTERVIEW Property, Liberty, & The Common Good

Episode Date: March 21, 2023

Alexander William Salter, awsalter.com, Economics Research Fellow with Free Market Institute at Texas Tech University, Associate Prof of Economics and associate editor of the Journal of Private Enterprise. Mr. Salter joins to talk about the current financial instability and how his two books look at the foundation of Western liberty and how to repair those failing foundations. His two books coming out this year "The Political Economy of Distributism: Property, Liberty, and the Common Good" and "The Medieval Constitution of Liberty: Foundations of Political Liberalism in the West".Find out more about the show and where you can watch it at TheDavidKnightShow.com If you would like to support the show and our family please consider subscribing monthly here:SubscribeStar https://www.subscribestar.com/the-david-knight-showOr you can send a donation through Mail: David Knight POB 994 Kodak, TN 37764Zelle: @[e-mail] App at: $davidknightshowBTC to: bc1qkuec29hkuye4xse9unh7nptvu3y9qmv24vanh7Money is only what YOU hold: Go to DavidKnight.gold for great deals on physical gold/silverBecome a supporter of this podcast: https://www.spreaker.com/podcast/the-david-knight-show--2653468/support.

Come on, come on, yes, yes, come on. At this year's Cheltenham, glory rests in the lap of the gods. Oh, curses. Alas, our hero hasn't placed. But there are still divine offerings up for grabs, with all NoviBet customers getting a €10 free bet for every day of Cheltenham. And on top of that, we're paying up to seven places each way on selected races throughout the festival. I declare this a most generous offering.

No, we bet more power to you. T's and C's apply 18 plus bet responsibly gambling care. Dot E Alexander Salter. And he is a fellow and comparative economic research fellow at the Texas tech free Market Institute. And he is also Associate Editor of the Journal of Private Enterprise. He is an Associate Professor of Economics there at Texas Tech.

And he has written several books in the past, and he's got two books that are coming out this year. The books are about economics and about liberty, and that's very important. And so I wanted to talk to him about those books as well as kind of current events. So joining us now is Alexander Salter. Thank you for joining us, Mr. Salter. Great to be back. Thanks for having me.

Well, thank you. It's always great to talk to you. And we've got a decision that is going to be announced tomorrow about interest rates. I liked this headline from zero hedge Powell's Volcker moment. Whatever the fed does on Wednesday will be a mistake because we're kind of stuck between a rock and a hard place between, uh, trying to tame inflation and a recession. So how do you see this? What, what do you think is, um, where are we right now in this? It is a bit of a tough scenario. On the one hand, I'm actually most mad at the banks themselves. I

understand the regulatory policies. I understand too big to fail and the perverse logic that that sometimes gives people who are actually running banks and managing their portfolios. At the same time, if you run a bond portfolio for a bank, presumably you know something about the relationship between bond prices and interest rates. And presumably you also know that as inflation picks up nominal yields, interest rates are also going to go up. Inflation has been happening for two years. The Fed's acknowledged it for one. That seems like plenty of time to adjust your portfolio so you don't end up in exactly this kind of position. So I think that this whole thing is rather farcical and does not speak well of the people who are actually running these institutions. That said, moral hazard is a

problem. Every time a bank gets in trouble, the Federal Reserve and the Treasury come charging over the hill with taxpayer money to bail them out. So maybe they don't really have any incentive to pay all that much attention to how much risk is in their portfolio, whether it's optimally structured. I think the least bad thing for the Fed to do is to continue focusing on inflation with its monetary policy. A good rule of thumb, I think, is one instrument, one goal. As long as we're talking about changing the target for the Federal Reserve's federal funds rate, we should continue to keep our eye on the ball on inflation. And for better or for worse, I should just say for worse, too big to fail is a fact of life. We know that the banks are going to get bailed out. Nothing's going to change that

at this point. The silver lining to that is it actually does free up the Fed to focus on inflation. If you know that the Fed and Treasury are going to commit the public sector's balance sheet to throwing money at any and all distressed institutions, well, yeah, you can prevent a financial crisis. I don't recommend that strategy because it basically means you're going to have crony capitalism writ large in the financial sector. But given that that seems to be a fact of life these days, it does mean that the Fed should continue to try and fight its disinflationary strategy. And based on the latest inflation numbers that we're seeing, we might be close to neutral territory. There's a chance that another 25 basis points hike would actually

get us where we need to be, but we'll have to see how the inflation data comes out in the next month or two. Well, it is interesting, but this idea that they're going to, as you point out, if they're going to bail out the banks and that kind of takes some of the jeopardy out of what they're doing with interest rates. However, Janet Yellen, who's a former Fed chair, now Treasury Secretary, has said, we're only going to do it for the big banks. We're not going to do it for the medium and small banks. And we've already seen a tremendous flight of capital from small and medium banks because people in the marketplace said, well, I think that's what they're going to do.

Now she has explicitly said that. Talk about that and talk about the threat to small and medium banks. Are we going to lose small and medium banks over this bailout? I'd like to take a minute and just marvel at the fact that we live in a world where being the manager of a bond portfolio for a regional bank is now considered a super stressful, high-risk job. That's not exactly the world that we thought that we lived in until recently. With more exotic financial instruments, investment banking, venture capital, maybe, but a bond portfolio manager at a regional bank now has one of the hardest jobs in the country, if not the world. That's rather amusing and depressing at the same time.

Preston Pyshko, In terms of the secretary's comments, I don't buy it. They always say, this far, no farther, and then the next crisis comes along, and then surprise, someone else that didn't get a bailout previously gets a bailout. This is just US banking history. We bail out more and we move the goalposts and we change the rules and we make them up as we go until there's basically very little incentive for anybody anywhere in the system to actually care about the risks that they've embedded into their capital structure. Now you can sayhko, Now you can say maybe it's a demand side thing, maybe the banks are being primarily irresponsible and the public sector is doing the least bad thing. Maybe it's a supply side thing in the sense that the regulators are sort of winking and

nudging and saying, go ahead, if anything goes wrong, the taxpayer will cover you. Preston Pyshko, Regardless of who the first mover is, it's pretty obvious that this is a pernicious equilibrium. It's going to mean that our capital allocation sector is the opposite of robust. It is stagnant. It is not going to effectively allocate capital. It is going to become thoroughly politicized. It's going to become less stable. It's going to be more prone to shocks. This is not a good future that we're working towards. So ending too big to fail, ending moral hazard, even at small and regional banks, that really needs to be priority number one for a reform oriented administration

that at least I personally hope comes to the fore in 2025. Well, you know, you talked about reasonable allocation of capital. And of course, a lot of people have talked about the exposure of Silicon Valley Bank and many of these other banks that are there. And, you know, of course, what has happened with their bond portfolio and the fact that they kind of let this set there as circumstances were changing, there was that kind of mismanagement. But also the mismanagement that was there with ESG, how do you see that playing into

all this? A lot of people focused on that because of their political orientation, you know, opposed to ESG. I'm opposed to ESG. I think it's fundamentally dishonest, uh, but, um, because they've been set up as, um, you know, fiduciary given a fiduciary trust to make money. And of course that, uh, puts that on the back burner. How do you see this in terms of its role of these bank failures?

Certainly SVB, but did it play a role in Signature as well? I'm somewhere in the middle on this. Unlike the left, I'm sure ESG did play a role. Unlike many on the right, I don't think that it was the main or even one of the primary factors. I think that at the margin, it did contribute in terms of taking their eyes off the ball and distracting them with things that really have no fundamental relationship to any of the things that we want to do when it comes to banking or capital allocation. But I don't think that it was so much of a distraction that it excuses or otherwise explains how we overlooked the basic error of failing to adapt capital structure in the face of rising interest rates. I don't think that any ideology, however fashionable, can really get in the way of that. That's supposed to be, you talk

to any business student undergraduate in the country about the relationship between bond prices and interest rates, they're going to give you the right answer because that's something that just everybody knows. This was a really, really basic oversight. I think that focusing on ESG and all these related social justice initiatives probably muddied the waters a little bit at the margin, but no, I don't think it can bear the lion's share of the explanation for what went wrong. What do you think about crypto? I've been saying all through the week that I believe that a large part of this was a move against crypto because they've been very explicit about the fact that they want to discourage banks being involved in crypto, especially over the last January and February this year.

We've had one pronouncement after the other from both the Federal Reserve as well as from people in government saying, get out of that after what happened with FTX. They have tried to imply that all crypto is to be shut down. And there were threats. As a matter of fact, you had Barney Frank, who was on the board of Signature Bank, and said, no, this is about crypto primarily. This is to send a warning sign about crypto. How do you see that playing into this and some of these other ones?

Because we've had, you know, as some of these, you know these you know signature bank from what i've heard was not in as bad a shape as first republic and they're doing everything to keep first republic alive but they killed signature bank and it was a key player in the crypto markets when it comes to crypto i'm a bit of an amateur myself i confess i have successfully predicted 20 out of the last two bitcoin price corrections so i'm a perpetual crypto skeptic who's just always proven wrong about everything. From my unlearned and unexpert perspective, that does seem to be one of the factors explaining the policy responses that we're actually getting. It's all well and good to say that this is about financial stabilization, and maybe you can make a case for the policies that we're actually seeing

being the quote unquote optimal policies. It's hard for me to overlook the fact that certain players in Washington have a golden opportunity to use this policy ostensibly for other purposes in a way that also rewards their friends and punishes their enemies. It's very difficult to overlook that. And we seem to be getting more of that in politics these days. Yeah, they made it very clear from a political standpoint that they really don't want crypto there. And I think they see it as a competitor to what they would like to push out, which is the Fed coin, a central bank digital currency. How do you see that? I have been paying more attention to the central bank digital currency issue. And that's something that I am very, very strongly against because you

know exactly how that's going to go. First, they start with the pilot program, which they're already doing. Then they extend it to financial institutions only. Then they extend it to households. So it goes from being wholesale to retail. And then after that, the screws start tightening on all the substitutes. And before you know it, the entire economy is roped into using a payment system that gives the centralized federal government direct control and supervision over the entirety of the payments processing system. I'm sure that won't have any pernicious effects at all. We can trust the government with that power, right? It's not like they'd burn us in the past. So I think that we got to stop this thing at square one, no pilot programs, none. Congress should step in and say,

uh-uh, not happening, not on our watch. No pilot programs, certainly no wholesale, and absolutely never, never, never no retail, because we know exactly what's going to happen after that. Preston Pysh, MD, MPH, This is not about improving the efficiency of the payments processing system. There are many, many other ways that we could do that, and we should do that, because the US payment system could stand for an update or two. But that's not what this is about. This is about control. This is about power. And we shouldn't let it come to that. Yeah. And of course, we had a federal governor who said, look, this is about sending money to people quickly. We can do that right now. You know, we've got all these different apps that do it. We've got Cash App,

we've got Zelle, we've got Venmo. And it was interesting to me that as all this stuff was unfolding last week, you had all of these mainstream media articles attacking Zelle. They weren't attacking it as being insecure. They were attacking it because people were losing their credentials over a phishing attack. Well, people can lose their credit card credentials over a phishing attack. that had absolutely nothing to do with Zelle, but Zelle is a, a competitor and, and they're going to have, um, uh, fed now, which is the wholesale part that you were just talking about. They've announced that that's going to roll out in July. And of course the big selling feature of it is that you can send money or receive money 24, seven, three 65.

And so that's already there in the private sector. Uh, you're right. When you say that's going to go wholesale and then they're going to go to retail. We've had some pushback against this by House Majority Whip Emmer, who has said we need to block and prohibit the federal government from going direct to consumers with this, the retail part of the Fed coin. And we need to prohibit the Federal Reserve from using CBDC for monetary policy. But of course, that's not going to get signed. And then yesterday we had Ron DeSantis hold a press conference talking about big brother digital money, but nobody was interested in anything he had to say about except what he

had to say about Trump. And so he's got, you know, he's showing the problem and he's got a different solution. And I want to get your comments on this. His idea is to have states in the Uniform Commercial Code, UCC, to have them prohibit the use of central bank digital currencies. What do you think about that? Would that work? I like the idea of finding a bottom-up approach,

putting the state governments front and center. I'm a big Federalist. I like seeing those sort of decentralized solutions. I worry though that this is one of those issues where if we lose in Washington, we're eventually going to lose everywhere. Just by the nature of the technology and the nature of the payment system, given the economies of scale of having it cover pretty much everything at once, then unless we have these successful actions in the national capital where they need to happen we're just setting ourselves up for losing slowly which isn't the same thing as saying don't fight the fight at the state and local level absolutely do that but there's only going to be so much that you can do if you want to stop fed coin from ever

becoming a reality we really need congress to stand up and basically say, this is never happening on our watch. Yeah. Yeah. And I'm afraid it is. It is happening, and it's happening very quickly. And so part of this, I see this, once everybody is banking with the Federal Reserve, then you're not going to have any need for small and medium banks. They'll all go away. They'll probably be these too big to fail banks. They'll probably find some way for them to participate financially in this so that they can help them in all of this. But that's the other trend that happened this last week. Besides the overt attacks, I believe, on crypto that were part of these bank closures, I think this whole idea,

this panic about, I've got to get my money into a big bank. And of course, what is the biggest bank that is too big to fail? That would be the Federal Reserve itself. And so all that panic and that fear, I think, is directing people to that. Let me ask you one more question about crypto. If you know about Silvergate, because that's odd to me. I was looking at this like Silvergate closes and you have Signature Bank closes and you have SVB closes and everybody's saying two bank failures. I said, why are they not mentioning Silvergate? It closed. And they have plenty of money. They didn't need one penny from

the FDIC to pay off all their creditors. They voluntarily closed and they were very, very heavy in crypto. Are you suspicious that there was some coercion to get them to close voluntarily what do you think what do you do you know anything about the silver gate issue that's not one that i've been following particularly closely it wouldn't surprise me if something like that were happening behind the scenes because again i think that the main point that we have to focus on with all of this is that crypto does pose a substitute to a government-centered payments processing system, which would significantly lessen the monitoring and control abilities of the federal government in terms of using the payments

processing system to incentivize things that they like and disincentivize things they don't like. Well, you can't do that if there's a good outside option where people can go and actually have meaningful financial privacy, meaningful financial control on a decentralized basis. These things have a way of happening in stages, step by step. Each step, nobody's quite sure about the big picture until the big picture becomes clear, but by then it's really too late to do anything about it. Preston Pysh, MD, MPH, That's right. Trey Lockerbie, MPH, So although I'm not terribly interested in crypto myself in terms of investing in it and learning a whole lot about it. So although I'm not terribly interested in crypto myself in terms of investing in it and

learning a whole lot about it, I like the possibilities that affords us for living our lives on our own terms. I'm very skeptical of this direction that we've taken with financial policy and financial regulation, where the growing narrative seems to be the default is you need Uncle Sam's permission before you do anything. I don't think that's an appropriate way of framing the issue for a free democratic republic. That's right. It'll be constant surveillance and control, as we've been saying for quite some time. And, you know, it is interesting. And I think it really kind of heightened their understanding of how crypto was a competitor

to them to see how the experience of the Nigerian government rolling out CBDC. They saw that there was a lot of, comparatively, there was a lot of interest in adoption of Bitcoin and other cryptocurrencies. So they thought, all right, we can go with CBDC and we'll push this out. And they found that nobody wanted the CBDC. They all started going into Bitcoin and Bitcoin exploded. And so then they tried to confiscate cash. They said, we're going to, we've got old cash, got new cash. Nobody's going to honor your old cash.

And it's been total chaos there. And so I think the Western banks, as they looked at that rollout, they're learning from it and they're adapting with it. But let's talk a little bit about your books. You've got a couple that are coming out this year. They're not out yet, I guess. The Political Economy of Distributism, Property, Liberty, and the Common Good. Let's talk a little bit about that. Tell us what that book's going to be about. Sure. I'm very excited about that one. That one's slated to come out on June 6th.

It's going to be published by Catholic University of America Press. It's available for pre-order, So get online and click that mouse. That's what I would like to see. I'm engaging this debate that's happening mostly, but not solely, on the American right about whether classically liberal-oriented conservatism has failed and whether the free enterprise system needs a jolt of what's sometimes called common good capitalism orders to succeed. At this year's Cheltenham, glory rests in the lap of the gods.

Oh, curses. Alas, our hero hasn't placed. But there are still divine offerings up for grabs, with all NoviBet customers getting a €10 free bet for every day of Cheltenham. And on top of that, we're paying up to seven places each way on selected races throughout the festival. I declare this a most generous offering. No, we bet. More power to you. T's and C's apply. 18 plus bet responsibly gamblingcare.ie. Now I'm very clear about my own priors and my own beliefs in the opening of the book. I'm much more libertarian, classical

liberal, although I am a Christian and I'm a, I'm a person of faith. I'm not, I'm not Catholic, but I am an admirer of Catholic social teaching, which is why Catholic social teaching plays such a large role in this book. So this is my main attempt to be as charitable as possible to a side whose policy recommendations I disagree with, but whose philosophical approach to questions of liberty and human dignity I have a lot of sympathy with. Yeah, so tell us a little bit about what the common good approach is to property and liberty. Right. So the common good approach building upon Catholic social teaching really builds on the great social encyclicals, the papal documents that the church put out starting in the late

19th century as Western economies really started to go full steam in terms of industrialization and the changing social trends that that also engendered, the change relationship between work and agriculture. Agriculture started to become much less important. Urban labor started to become more important. That's really when you had the first time in history, the prospect of something like we would consider widespread unemployment, just in terms of the nature of work, the labor contract and all that stuff. These are things that I celebrate as an economist who likes economic development. At the same time, I recognize the social tensions and problems that they can introduce. And so I admire the

church's attempt to set down some moral guidelines for how labor and capital can cooperate with each other for the common good good rather than just view each other suspiciously as enemies. Taking that approach and bringing it to the economic problems that we have today, it's pretty clear that we don't have an economic system that's terribly friendly right now in ways that it was in the past to liberty and dignity and the common good. Markets are becoming more consolidated, more subject to corporate control rather than actual competition. Small d democracy is being squeezed out in terms of the administrative state. The family is in terrible shape. We need to definitely work on that core social institution. These are all real concerns. Even if you're a libertarian or classical liberal who's very free market, as I am,

these are important concerns. Because in order to have a flourishing market economy, you need civil society and politics to do its job in the background, which isn't to say that you necessarily need a modern hierarchical nation state. There are many other governance arrangements that we can envision, but something has to be doing the work to provide the social, political, and moral slash spiritual capital necessary so that we can engage in market transactions in a way that's effective and dignified. I'm worried that we're getting away from that model in terms of the political trends that have engulfed the United States really since the 2008 financial crisis, if not longer.

I agree. I think if you go back and you look at the founders, they talked about consolidation. We talk about centralization, but we mean the same thing. And you're talking about how centralized everything has become, how all power and decisions are being removed from the local community. And it's making people, first it made them passive, and now it's making them powerless. And I think they would be absolutely amazed at what has happened now. And I think when you go back and you look at the entire population of the 13 colonies at that time, you know, compared to just a small state today, I think the consolidation has made these people ungovernable, unaccountable to us. And that's the thing that most concerns me.

And I think that we need to recover things in the local level. You say that you agree with them in general. What are some of the policies that they're talking about that you may or may not agree with in terms of making this happen? The goal with the policies is finding ways to make sure that ordinary households, just ordinary American families, ordinary households have access to productive property because property and households are independent households.

They're going to have a stake in the social order. They're not going to easily acquiesce to this usurpation of power, both by Washington and general and specifically the administrative state. That's the goal. The hard part is figuring out how to actually do that. Because in order for people to actually have this ownership mentality, there has to be a lot of things that they're willing to do for themselves and not necessarily outsource, even if it's to the market. But it can be very profitable to outsource certain functions to the market. It can be very profitable in terms of your private living standards to not be your own boss, to be an employee for somebody else. And these things might make sense

for an individual household, for a county. But when you actually have an entire economy characterized by the fact that the ordinary or representative citizen really doesn't have any tangible access to productive property that they own and control, that minimizes their ability to basically say no to the market. That minimizes their independence. And given that, quote unquote, markets have become increasingly susceptible to corporate de facto political control. And I think that the reason that we see that is because corporations themselves have been politicized. Given that we're seeing that, it's very difficult to figure out what policies we should actually pursue at the margin to put property and hence dignity and liberty back in people's hands.

Luke Gromen, You can talk about doing things with the tax code in terms of incentivizing small businesses and small enterprises. There are various debates over family policy. Family policy in terms of marriage and children is something very closely related to that, but it's not clear that any attempt that we've made in the United States has done all that much, even when we try and subsidize things or tax other things. There are various regulatory changes that you can pursue. What I'm mostly interested in doing in this book isn't setting out a concrete policy agenda. Here are the XYZ

policies we need, but it's trying to find a way for old school, classically liberal conservatives and newer common good conservatives to actually find some common ground so that we can work towards pursuing the policy agenda that we both want to actually achieve the goals that we'd like to see in terms of restoring democratic republicanism to this country. And, you know, I think when we look at it, it is perhaps that'll be something that comes out of the baptism of fire of this kind of digital money stuff that happens here. Because as people are looking at this, it's like, how do we get away from this constant push to put us into a virtual society? Well, one of the things that we're going to have to do is we're going to have to, in the physical world, we've got to make relationships with people that are around us. We have to learn some skills so that we don't outsource everything. We can easily see the

results that have happened as we've outsourced our industry and our manufacturing to a great degree to China. And of course, they're allowed to build as many power plants and they can make them as dirty as they wish. So we've outsourced energy production as well as all manufacturing to them for all effective purposes. And so when we start to bring some of that stuff back, if we start to bring that back out of necessity, because we don't want to have a number stuck on us and, and have everything that we do tracked and controlled and, uh, you know, turned into a privilege.

I think that's going to be a necessity. I think, uh, as people are looking at this and saying, well, um, you know, is it going to be stopped in Washington? Most of them don't even want to talk about it. Uh, is it going to be stopped at the state levels? Is it going to be stopped at the local levels? Is it going to be stopped by us doing something independent on our own? And perhaps as we see this coming towards us, just as we saw with the lockdown, people were able to see what was happening in their child's classroom because they were doing

classroom at home. Perhaps there'll be an awakening for that in a kind of a difficult way. You know, it's going to have to light a fire under people, I think, for us to take the path of greater resistance. It's so easy to outsource our lives, just like we've outsourced our manufacturing to foreign countries. Let's talk a little bit about the other book that you've got coming out. When is that coming out? That is The Medieval Constitution of Liberty, Foundations of Political Liberalism in the West. That looks like a great book. I'd like to read that one. Well, thank you for that. And I'm excited for that one to come out too. That's also calendar year 2023. That one's going to be

a little bit later. We don't have a concrete release date for that yet, but we know it's going to be either late summer or early fall. That's going to be with University of Michigan Press. And what's really interesting about that one is that we are publishing an online open access version. So if you have an internet connection or if you have a tablet or anything, you can just log online and read it. It is zero money price for electronic readers. We want to get the word out as widely as we can. So even though it's an academic book written primarily for other scholars who are working on the deep causes of liberty and economic development this is something that we also wrote with the goal of being intelligible to a wider audience as well and we want to as many eyeballs on it as we possibly can because

we think it's an important debate that many people should be as conversant with as possible yeah yeah very much so tell us a little bit about uh the medieval constitution of liberty the origins of how did that um how did people start to turn towards liberty, medieval times? Absolutely. So the way that we approach the topic is actually through this debate of why did the great enrichment happen in Western Europe first, Great Britain, the Netherlands, and then eventually the rest of Europe and then North America. And so there's a broad agreement amongst economists and political scientists that the ultimate cause is good institutions, rules of the game that promote markets, commerce, property,

rights, the rule of law. That's all well and good, but now you push the analysis back one stage. Okay, what causes good institutions? Where did those institutions come from? There's always one more stage that you can go back. And the dominant explanation amongst development economists today, I and my co-author actually are not terribly fond of. You talk explanation amongst development economists today, I and my co-author actually are not terribly fond of. You talk to most development economists and they say, well, it started in the Renaissance and culminated in early modernity with the construction of centralized hierarchical coherent states because you needed well-governed states to implement a uniform rule of law, to minimize the excess burden associated with taxation. You needed this thing

that they call state capacity. Governments needed to be strong enough to do all the right things, provide public goods, uphold the law, do these things. Well, if you know anything about human political history, you know that strong states can just as easily be used to do really, really nasty things to people, to do really, really nice things to people. Look at countries like the Soviet Union, Cuba, North Korea. In terms of their ability to inflict

misery and just destroy lives, that's a lot of state capacity. The government is capable of doing things. It just does the wrong things because it uses that awesome coercive power to ruin people. Luke Gromen, So the question really needs to become, why was state capacity, if that's important, why was it used responsibly in Western Europe first? What changed? Normally, the incentives associated with political power are to prey on people, not to help people. So something must have forced the people with power to do the right thing. And so I and my co-author actually say it's the political and economic inheritance of the high Middle Ages that actually forced state capacity to be used in a productive rather

than a predatory way. And we highlight, as the book's title suggests, the medieval constitution, the de facto governance arrangement that promoted a balance of power, representation, checks and balances, all these things that are embodied in the US constitution in a formal written down sense, where hundreds of years earlier embodied in medieval Western European governance institutions on a de facto basis. It's not like anybody thought to set down and write a formal constitution governing the estates of the realm. But when you have this system that evolved after the fall of Rome, where you had the burghers checking the nobles, checking the king, and you had checks

and balances, and you had parliaments, actual representative assemblies that were a genuine innovation in terms of legal and political history. All these institutions evolved to solve specific and local problems, but they fit together just the right way, like pieces of a puzzle, to promote a general culture of liberty. And so when you look at what the early Enlightenment thinkers were talking about, when you eventually get to thinkers like Locke and Montesquieu, they were ultimately theorizing about relationships and political institutions that Europe in many ways had already had for centuries. And so to the extent that the narrative amongst economists these days is we only got rich because we got away from the chaos of the high middle ages of medieval Europe.

My coauthors say, uh-uh, it's because we had that heritage that informed the state building process that we got nice stuff in the first place. That's interesting. Yeah, because as you point out, there's not a formal constitution. It's kind of tradition that they have in the UK, traditions of free speech and traditions of trial by jury and other things like that. Going back to Runnymede and so forth and building upon that is just kind of setting down precedents.

What I see that really scares me to death is how in the UK, for example, they are rapidly, rapidly laying down new traditions that contradict all of that. It used to be such an important value of free speech, for example. They would celebrate it on Speaker's Corner at Hyde Park. People would stand up on a soapbox and the police would gather around to protect the people who were speaking because typically they'd get up and talk about something that was controversial, politics, religion, that type of thing.

And they would protect the speakers. That has changed now to the extent that you've got police who are arresting people who are silently praying in some circumstances. And of course I, I witnessed and I saw it change very rapidly in the 1980s. My wife and I went and we love to go to speaker's corner and listen to people debate and, and,

and speak. But then 20 years later, when we took our kids and went there, there was kind of a mob mentality, an intolerance that was there. And the police were getting very concerned about even protecting that. And now the police themselves have been going around and enforcing essentially thought crimes, hate crimes, all these other things. It seems like throughout the West, we're losing that, even though we have it written down in a contract here that they swear to as a condition of their office. They pretend as if we don't even have a written constitution with that. I mean, how do we,

and I guess that's one of the reasons why I think it's important to go back and look at the origins of this, because we seem to be losing the foundation right now, don't we? That's a good way of tying into the subtitle of the book. And the subtitle of the book is The Political Foundations of Liberalism in the West, ultimately explaining enduring traditions of political and economic liberty. Liberalism is the philosophy of the Enlightenment. It does not mean, contrary to how it's used in the United States, the left side of the American political spectrum. The root word of liberalism means liberty. It means freedom. And so we need to understand exactly where these traditions of liberty came from and why we're

losing them. One of the reasons that we're losing them is we are actually turning our back on liberalism itself. The philosophical foundations of our societies and our institutions, people have largely lost faith in. And it's not so much an act of turning against it in some cases as it is that most people just don't care. This seems to be the trend of the time. They're not much interested in understanding where these ideas come from and why they're so important, which is one of the reasons that we wrote the book. This was not intended to be a political book in the sense of advocating for a program or anything like that. We're very much important, which is one of the reasons that we wrote the book. This was not intended to be a political book in the sense of advocating for a program or anything like that. We're very much

doing deep history scholarship, speaking to these abstract and some people might say ivory tower debates. But even academic research projects are motivated by some important human moral concern. Take every doctor, every medical doctor who works on important problems. Medicine might be a science, but the reason that you want to cure people is because you think that death and disease are bad and you want people to flourish. It's the same with what we're doing in this book. We want to have a flourishing, healthy society. We think that liberalism is what gets us that. So we want to understand where it came from as well as why it seems to be on the retreat, because that does not portend well for human wellbeing. And if we're going to understand where it came from as well as why it seems to be on the retreat because that does not portend well for human well-being. And if we're going to understand what's going wrong now, we need to understand why things ever went right in the first place. In order to understand why

a machine is broken, you better have a good idea of what it looks like when it's fixed, when it's working as intended. So understanding liberalism and liberty is a crucial part of this project. That's a great way to put it. You don't try to go over all the different counterfeit money. You just learn what the real thing looks like. Of course, now they're changing the money so quickly. But I think it all began when the authoritarians stole the name liberal for themselves.

The people we identify as liberal right now don't support free speech. As a matter of fact, fact what we're talking about earlier censorship has gotten so bad the first reaction of many people in congress was well how do we censor social media so that they can't feed a bank run or whatever you know i mean it is their first impulse is to censor free speech uh to their credit to their credit they don't seem to be very interested in even calling themselves liberals anymore. They're back to using progressives. So points for honesty there at least.

Progressively authoritarian is what I think they need to call themselves. We're progressing towards something. Yeah, yeah. They're progressing towards the bottomless pit here. Thank you so much. It's great talking to you.

And when the book hits, maybe we'll get you back on, talk about a little bit more. AWSalter.com S-A-L-T-E-R. AWSalter.com is the website. And, uh, there you can see the writings and I'm sure there'll be links there, um, to, uh, to your book, uh, that, that people will be able to find that place, their pre-orders as well. Thank you so much for joining us. It's my pleasure. Thank you for having me. It was a great conversation. Thank you. Always enjoy it. The Common Man.

They created Common Core to dumb down our children. They created Common Core to dumb down our children. They created Common Past to track and control us. Their Commons Project to make sure the commoners own nothing. And the Communist future. They see the common man as simple, unsophisticated, ordinary. But each of us has worth and dignity created in the image of God. That is what we have in common. That is what they want to take away.

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