Transcription
Yes, sir. My question is why students in American colleges and universities are thought that capitalism is bad. Is it to create a new kind of behavior so that we will assume do not make profit because you may lose?
The last thing I will say, will you advise me to divest? I mean, sell my stocks and say, oh, capitalism is bad, I will not make anything out of it. Okay, so I am smart enough not to give investing advice. I have been quoted on occasion. Somebody's asked me about some meme stock or a stable coin, and I've said that it's irrationally high, but it might go up. So I'd, and that's the way I feel about the stock market right now.
When people complain about capitalism, I don't think that they're really complaining about capitalism. I think they're complaining about, say, the distribution of income. Because we tried the other system and it doesn't work. And by the way, I mean, this is a point that Ken Arrow made, that if you think about a planned economy, the social planner better not be boundedly rational. Right? And if you think about, like, the Russian economy. It was a catastrophic failure because the problem of how many widgets you should build here. And I mean, it's just too hard. So, you know, capitalism is like democracy. It's, you know, the worst of all problems, but it's better than any alternative or whatever the expression goes.
Any system can be improved. There's a, an interesting book, Luigi and I were talking about earlier. What is it? Breakneck. Breakneck about China. And it's written by a Chinese-Canadian. And he describes the difference between China and the U.S. is China is run by engineers and the U.S. is run by lawyers. Which is stealing a line from, I used to say, the US is run by lawyers advised by economists. But I think, I haven't finished reading this book, but the premise is certainly correct, but he doesn't say that one is better than the other. Right? The Chinese economy, I think he has a very good point that they've developed process knowledge. They don't invent things, but they can build anything. And we invent things and we can't build anything. And he blames it on the lawyers. I mean, that's kind of a snappy one-liner. The political system has made it impossible to build anything. And I think those are just obvious facts, that it costs ten times as much to build high-speed rail here as it does in China, and five times as much as... in Europe and nobody really likes it.
But, and even some liberals like Ezra Klein complain about how much it costs to build, but they're not He doesn't say, all right, which of the 50 regulations that make it hard to build and rules about whether you have to use unions, which of those are we going to get rid of? And again, what Cass Sunstein and I call sludge, the thing that makes it so hard to build, sludge is bipartisan. The left have all the, say, rules on pollution and climate change and so forth, but there's also all kinds of rules that basically protect businesses. In Illinois, the rules determining who can be a distributor of alcohol were written to enrich the people who are distributors of alcohol. And so I don't know who wrote those. I mean, it's a blue state, but it's a corrupt system. And so the regulations that protect incumbents, that's bipartisan. And I don't see anybody on either side that is ready to tear down the position that the incumbents have and mergers and that, how Google was allowed to buy Waze. How do we say we have an antitrust system when somebody has a monopoly on GPS and they're allowed to buy their competitor, right?
So, yeah, I'm pro-capitalism, I don't know what this capital isn't, but I'm pro, but I think it could be improved. Luigi, would you... Professor, why capitalism is bad? Why is it bad? I'm saying that when people protest, they think, Can't Jeff Bezos get by with only $100 billion? And there are too many people starving, and housing is expensive. That's all true. But do we know how to create a better system? No, we don't. So I'm, you know, again, Luigi complains that I'm too modest. I don't know what the perfect system is, but I can improve it a little bit at a time.