Latest / Thinking Class / #068 - Lorenzo Warby - Why Economists' Predictions Go Wrong, The Roman Empire Fell, And Why You Should Never Give Bureaucrats Moral Projects

Transcript

#068 - Lorenzo Warby - Why Economists' Predictions Go Wrong, The Roman Empire Fell, And Why You Should Never Give Bureaucrats Moral Projects · Thinking Class

• 0:00
  SPEAKER_01: Hello, classmates, and welcome to Thinking Class.
• 0:03
  SPEAKER_01: I'm John Gillam, and today I'm speaking with Lorenzo Warby.
• 0:06
  SPEAKER_01: Lorenzo writes a Substack Lorenzo from Oz, and he contributes regularly to Hallendale's Substack, not on your team, but always fair.
• 0:15
  SPEAKER_01: He needs little introduction to longtime classmates because this is the third time he has appeared on the show.
• 0:21
  SPEAKER_01: Check out the archives for the other two.
• 0:24
  SPEAKER_01: In this episode, Lorenzo and I think out loud about why the term capitalism is misleading and why we should speak about living in a mercantile society instead, the many complexities of commerce and the cultural influences on economic growth, the prevalence of activism in the modern world and its impact on social capital, the implications of bureaucratic moral projects, the challenges of accountability within bureaucracies, the impact of migration policies on democratic processes, the historical context of the fall of empires, particularly the Roman Empire, why effective institutions are more valuable than empires, the importance of local governance and trade in fostering prosperity, and much, much more.
• 1:06
  SPEAKER_01: It's always a pleasure to speak with Lorenzo.
• 1:08
  SPEAKER_01: We cover a lot of ground in this one, so hold on to your hats because you're going for a ride.
• 1:13
  SPEAKER_01: And make sure to like, subscribe, and follow the show on YouTube, your podcast platform of choice, and Substack while paid subscribers get the opportunity to contribute to questions that will be included in a special QA to my guests that only you will get access to as a paid subscriber.
• 1:30
  SPEAKER_01: Let's grow Thinking Class together.
• 1:32
  SPEAKER_01: Enjoy the show, classmates.
• 1:46
  SPEAKER_01: Lorenzo Warby, welcome back to Thinking Class for the third time, I believe.
• 1:50
  SPEAKER_01: Yes, it is.
• 1:51
  SPEAKER_01: My pleasure.
• 1:52
  SPEAKER_01: Well, I'm sure it's not going to cap out at a trilogy.
• 1:55
  SPEAKER_01: You write too much interesting piece, too many interesting pieces for that.
• 2:00
  SPEAKER_01: Uh I want to dive straight into some of your most recent pieces.
• 2:05
  SPEAKER_01: And one of them has been on capitalism.
• 2:08
  SPEAKER_01: And do you make the argument that it is, to put it lightly, a very unhelpful and imprecise term.
• 2:16
  SPEAKER_01: So, Lorenzo, why is capitalism an analytically dreadful term?
• 2:22
  SPEAKER_00: Okay, so um the first thing to remember is it was originally popularised by Marx and he was not a fan, and you should always be careful about terms which are coined by people who dislike the thing they're describing.
• 2:36
  SPEAKER_00: It's not a good start.
• 2:37
  SPEAKER_00: The next problem is that uh it's not a good description of how mercantile society really works.
• 2:46
  SPEAKER_00: Because if you look at you look at what commerce is, right, which is the buying and the selling, okay, it doesn't rely on just capital, right?
• 2:57
  SPEAKER_00: You've got to use land, you've got to use labor, you've got to use capital, you've got to put them together, and there's a whole process of risk management, factor management, discovery processes, which condoms called entrepreneurialism.
• 3:12
  SPEAKER_00: That's all got to be done.
• 3:14
  SPEAKER_00: Capital is just part of the story.
• 3:16
  SPEAKER_00: And often the person doing the commerce, A, is not using their own capital, or if they are, it's not the only capital they're using.
• 3:25
  SPEAKER_00: And capital isn't the central thing.
• 3:26
  SPEAKER_00: It's a necessary thing, absolutely, particularly as you've got to have enough means of payment to cover the risks, right?
• 3:34
  SPEAKER_00: And if you choose wrongly and you don't have enough coverage, well, you go out of business.
• 3:39
  SPEAKER_00: But it's that in it's that coordination of things that makes commerce work.
• 3:43
  SPEAKER_00: It's not just being a capitalist.
• 3:47
  SPEAKER_00: Um, and as I'm, you know, spent the last 20 years in small business, I'm very aware that you know what makes the business run is not capital, it's the coordination of people, of marketing, of service providing.
• 4:01
  SPEAKER_00: And it's just a really bad way to think about commerce and business, to think it's about capital.
• 4:06
  SPEAKER_00: Um, also, Marx has a very odd way of defining capital, but we'll leave that aside.
• 4:11
  SPEAKER_00: Um and I'm I sort of get really uncomfortable when people when people take up that term.
• 4:18
  SPEAKER_00: I mean, economists have accepted it, and I don't really think they should.
• 4:21
  SPEAKER_00: Um, because I think it is very misleading about how commerce and business actually operates.
• 4:28
  SPEAKER_01: Um that's what would the alternative be?
• 4:32
  SPEAKER_01: Let's say there was a an agreement amongst various nodes of economic um uh Boffin's economists, I think we call them, uh, that decided capitalism, we're getting rid of the term, what would an alternative world look like that would be more precise?
• 4:49
  SPEAKER_00: Okay, I would prefer to talk people that talk about commerce and mercantile society or commercial society.
• 4:56
  SPEAKER_00: Because the other problem with capitalism is that Marx had this idea that it was all this enormous system, right?
• 5:03
  SPEAKER_00: Um, and that ends up what happened then ends up happening is people start conflating what the state does and what commercial operators do as some sort of unified thing, and it gets very unclear who's actually responsible for what.
• 5:20
  SPEAKER_00: And that then leads to very poor analysis of a whole lot of things, like for example, empires, which is capitalists, which is not what they are at all, really.
• 5:29
  SPEAKER_00: Um and so that's the problem.
• 5:33
  SPEAKER_00: You're what you need is a term that's more precise, which invokes what's actually going on.
• 5:38
  SPEAKER_00: So commerce is the buying and the selling, right?
• 5:41
  SPEAKER_00: It's the organizing, the buying and the selling.
• 5:43
  SPEAKER_00: Now, if you're in commercial production, you're also producing goods and services, but you're organizing the buying services of.
• 5:50
  SPEAKER_00: Um, it's not the same as trade, right?
• 5:52
  SPEAKER_00: So rulers engaged in trade, but they weren't doing commerce in that sense.
• 5:58
  SPEAKER_00: Um so trade and commerce aren't exactly the same thing.
• 6:01
  SPEAKER_00: Commerce is the process of the buying and the selling and the organizing to do that.
• 6:06
  SPEAKER_00: Um it's not simple exchange, uh, which you know foragers trade in stuff, but they weren't engaged in commerce in any complex sense.
• 6:15
  SPEAKER_00: Uh so yes.
• 6:16
  SPEAKER_00: And so we should really talk about commerce and we should talk about mercantile society or commercial society, and we should see the operation of the state as something that is a separate thing from what commerce does.
• 6:30
  SPEAKER_00: Obviously, it sets up the institutional framework with which commerce operates, but commerce has a very complicated relationship with the state.
• 6:37
  SPEAKER_00: Um, including, of course, black markets, grey markets, formal, formal, formal commerce, informal commerce.
• 6:46
  SPEAKER_00: Um, and you so, yes, so that's why I should say we should talk about commerce and we should talk about mercantile society or commercial society.
• 6:56
  SPEAKER_01: That would seem more uh uh fitting with the the historical record, and this is and you alluded to it, this is the issue with uh accepting the social history as Marx presented it.
• 7:14
  SPEAKER_01: Yeah.
• 7:15
  SPEAKER_01: I I spoke recently with um with the great British anthropologist Alan McFarlane, who is Professor Emeritus at at Cambridge, and his whole work uh you met him?
• 7:28
  SPEAKER_01: No, no, I've read his book.
• 7:29
  SPEAKER_01: Sorry, go on.
• 7:30
  SPEAKER_01: Oh, you read it?
• 7:30
  SPEAKER_01: Yes, yes, yes.
• 7:32
  SPEAKER_01: Yeah, it is very good.
• 7:34
  SPEAKER_01: So I've I've I've I've ended up down a rabbit hole of Alan McFarlane's work, and indeed he's he's coming back on so we can delve into it some more.
• 7:41
  SPEAKER_01: But his whole his whole shtick really was as someone who was a trained historian who then became a trained anthropologist, he realized from reading the records that this social history that uh, and we're talking about England in particular here, which uh I think we can argue exported much of what we um see in the modern world to the globe.
• 8:07
  SPEAKER_01: Um, and so it's important that we focus in on England, is it was never a peasant society.
• 8:12
  SPEAKER_01: So Marx uh was from Germany.
• 8:15
  SPEAKER_01: Uh it was very common for Europeans to live in peasant societies, which is to effectively be um landless um labourers and uh indentured to some kind of feudal prince or lord.
• 8:30
  SPEAKER_01: Whereas in the English records, you can actually find that people of every class were trading land and property um at least as far back as a thousand years, but perhaps beyond that, people believe it actually goes right into Anglo-Saxon times.
• 8:45
  SPEAKER_01: Yes.
• 8:46
  SPEAKER_01: And so we had wage laborers then.
• 8:48
  SPEAKER_01: That that's effectively what we're saying is the capitalist society that Marx said was created outside of the industrial or within the industrial revolution is false.
• 8:59
  SPEAKER_01: It was already in England for many centuries before, and the Industrial Revolution was only possible because the people itself was were capitalist by their nature, is basically every innovation, whether it's technological or political, is downstream of a culture, an emergent culture that has already taken place.
• 9:22
  SPEAKER_01: And so the notion of capitalism as you've talked about it today, which can often be tainted with this idea of oppressor, oppressed, um, not to say there weren't some spurious business practices in the rise of the Industrial Revolution in the north of England.
• 9:39
  SPEAKER_01: We know there were, but that it has been tainted with that brush is based on a false social history or a misreading of it in the place where it's most important.
• 9:50
  SPEAKER_00: Yes, absolutely.
• 9:51
  SPEAKER_00: What England had right back was commercial society.
• 9:55
  SPEAKER_00: Commerce was pervasive.
• 9:57
  SPEAKER_00: And to say that those yeomen, for example, were capitalists is silly.
• 10:01
  SPEAKER_00: But to say they were living in a commercial society is perfectly accurate.
• 10:06
  SPEAKER_00: That was what exactly was going on.
• 10:08
  SPEAKER_00: And actually, that business about England not really a conventional peasant society, and that's not only about serfdom, that's also about how the households work, for example.
• 10:17
  SPEAKER_00: Yes, very differently in the right.
• 10:20
  SPEAKER_00: To give you an indication of that, okay, so in the second world war, what the British called an infantry division, the Germans called a motorized division.
• 10:37
  SPEAKER_00: Because all the British divisions were mechanized and motorized.
• 10:43
  SPEAKER_00: But even in the second world war, most of the German divisions were not.
• 10:49
  SPEAKER_00: Most of their infantry divisions were still using horse-drawn transport.
• 10:56
  SPEAKER_00: And that's the difference between a highly commercialized society whose farming had been commercialized for a long time and was a highly mechanized society.
• 11:07
  SPEAKER_00: So if you were a British farm laborer, you knew your way around machinery because there was machinery where you worked.
• 11:16
  SPEAKER_00: If you were a German peasant, there's a good chance you'd never had much to do with machinery at all.
• 11:24
  SPEAKER_00: Um, so and that goes back to where industrialization happened first.
• 11:29
  SPEAKER_00: But one of the reasons why industrialization happened first there is it was such a commercial society.
• 11:35
  SPEAKER_00: When you look at why industrialization took off in England first, uh, one of the things you've got becomes quite clear is you had all these jobbing artisans who were trying to solve commercial problems.
• 11:51
  SPEAKER_00: Right?
• 11:52
  SPEAKER_00: James Watt is not some gentleman scholar doing this as an idle exercise.
• 11:58
  SPEAKER_00: He has a practical commercial problem in front of him, which he wants to be, which he wants to solve and expects to make money from, right?
• 12:06
  SPEAKER_00: And it's just that's pervasive throughout the Industrial Revolution.
• 12:10
  SPEAKER_00: Um, so yes, and that's another way this terminology of capitalism and capitalist really gets in the way, right?
• 12:18
  SPEAKER_00: So it's commerce, it's mercantile society, it's commercial society, it's the buying and the selling and the organizing and the buying and selling.
• 12:27
  SPEAKER_00: So, for example, there's um there's two people who are really useful to read on this.
• 12:31
  SPEAKER_00: One is Mayor Comb, who's an um uh American um economist at Dartmouth University, and he writes very interestingly.
• 12:42
  SPEAKER_00: I mean, in fact, it's uh because I wrote a post that he commented on when we got in touch, I got to read his writings and I got to discuss things with him by email.
• 12:50
  SPEAKER_00: Uh and he he's I don't always entirely agree, but we mostly agree.
• 12:56
  SPEAKER_00: And I found him stuff very enlightening and very informative, and it really affects it changed the way I looked at some of his stuff.
• 13:02
  SPEAKER_00: Um and the other person who's a very interesting person to read is Peter Stringham, who I think is mainly a lawyer.
• 13:07
  SPEAKER_00: But um, he's written a really interesting book on private governance, most of which is just straight history.
• 13:13
  SPEAKER_00: Um the chapter where he gets more into you know theory and what you should do, I that's the chapter I don't really agree with.
• 13:19
  SPEAKER_00: But the rest is great.
• 13:21
  SPEAKER_00: And one of the things he brings up is again, and May Cohen's on this point too, Mick Cohn's on this point too, a lot of what evolved was people solving practical problems.
• 13:33
  SPEAKER_00: Stock markets didn't start because some ruler decided stock markets would be a great idea.
• 13:39
  SPEAKER_00: Stock markets started often, you know, sort of in the gray area of the law, because various people engaged in commerce could see a use for doing this and wanted to exchange stocks, basically, um, and financial instruments and raise capital, right?
• 13:56
  SPEAKER_00: And so stock, I mean, this is why stock markets are still run by corporate private corporations.
• 14:01
  SPEAKER_00: You know, there's the the the Australian stock exchange is a private corporation that runs the Australian stock market, for example, and so forth and so forth.
• 14:08
  SPEAKER_00: They grew up as a response to problems.
• 14:11
  SPEAKER_00: Now, of course, you had an institutional framework where these things could grow up as responses to problems, and that makes a big difference.
• 14:22
  SPEAKER_00: But that's not capitalism, that's commerce interacting with certain structures of culture and institutions and certain structures of the state.
• 14:35
  SPEAKER_01: Question that's just dropped into the top of my brain there is how significant do we think the framing of capitalism in or having been um I suppose formed by Marxist take on it has been for what we now see as commercial society.
• 14:56
  SPEAKER_01: So where I'm going with this is we've talked about how pre-industrial revolution in England we had a highly commercial society, we had lots of tinkerers and people trying to figure out a problem to be able to help them and their own individual endeavors.
• 15:13
  SPEAKER_01: They would occasionally share what's going on within uh societies that they'd set up.
• 15:19
  SPEAKER_01: It was civil society, it was an emergent property, it wasn't a top-down thing.
• 15:23
  SPEAKER_01: No.
• 15:24
  SPEAKER_01: Yet what you've what I notice is capitalism now is is so heavily infused with state activity, yeah, insofar as it is directed, whether it's by regulators, whether it's by supranational bodies.
• 15:42
  SPEAKER_01: And I can't help but think, if I think about the likes of Marx and Engels, and then a lot of their followers since, is that most of the time it serves to be able to view capitalism in their way because it's about trying to that full social history, this one of let's return it back to collective ownership.
• 16:04
  SPEAKER_01: Well, in England, we can see that just never existed.
• 16:07
  SPEAKER_01: And so uh, and and if it and even if the collective ownership existed that they're supposing is about at a family level or a community level, is what they're proposing is that it ends up being uh held at the state level.
• 16:22
  SPEAKER_01: And so then you end up with states directing things and then all of the various side actors.
• 16:26
  SPEAKER_01: So I guess the question is, is if there was a change in the understanding of capitalism, which uh, you know, not utopian enough to think there will be, d do you think that would that would change our approach to this heavily regulated top-down signalling world that we live in?
• 16:45
  SPEAKER_00: Yes.
• 16:45
  SPEAKER_00: Yes, absolutely.
• 16:47
  SPEAKER_00: Um people are used to thinking it as a system, as a unified system.
• 16:53
  SPEAKER_00: And of course, if it's a unified system, the system can be managed and run and organized, right?
• 17:01
  SPEAKER_00: There's a reason why Adam Smith was not very keen on the man of system side.
• 17:06
  SPEAKER_00: He thought that was a mistaken way of thinking about social and human action.
• 17:11
  SPEAKER_00: Um, and if you see it as commercial society, right, that's people acting in certain ways, but it's not a unified system in the same sense, right?
• 17:22
  SPEAKER_00: And it's also clearly not intimately interactive with the state.
• 17:27
  SPEAKER_00: The state may help it, the state may hinder it.
• 17:30
  SPEAKER_00: The state may be helping them, the state may be getting in the way.
• 17:34
  SPEAKER_00: Um, and when you look at commerce around the world, the relationship between commerce and the state is very, very complex.
• 17:42
  SPEAKER_00: I mean, there's a lot of societies where there's a lot of state act uh common commercial action which tries to avoid the state as much as possible.
• 17:51
  SPEAKER_00: I mean, it tries to hide itself from the state, and that's usually a sign that you've got a pretty dysfunctional state.
• 17:56
  SPEAKER_00: I mean, Latin America and Africa, there's a lot of that, and the more dysfunctional bits of Asia, there's lots of that.
• 18:02
  SPEAKER_00: But I'll give you a really practical modern example of where this it's a system thinking goes wrong, and that is the commercial development of China, right?
• 18:14
  SPEAKER_00: So people say Dan Xiaoping did this thing, that's not what happened.
• 18:21
  SPEAKER_00: What happened is in the Culture Revolution, there was such a churn and such disorganization of the Communist Party, because remember, Mao is using various levers to churn over the Communist Party to break up opposing people who are opposing his will in the system, right?
• 18:43
  SPEAKER_00: So he uses the Red Guard against the Communist Party, then he uses the military against the Communist Party, and the Communist Party lost a lot of its penetration into the countryside because of this churn and disorganization and so forth.
• 18:57
  SPEAKER_00: So villagers started doing their own thing.
• 19:02
  SPEAKER_00: And it's clear when you start looking at the records that even at the height of the Cultural Revolution, there was still a lot of commerce going on.
• 19:10
  SPEAKER_00: How can we tell?
• 19:11
  SPEAKER_00: All the people being charged with engaging in commerce, right?
• 19:16
  SPEAKER_00: They were constantly charging people for engaging in commerce.
• 19:20
  SPEAKER_00: So what Pelt tells us is there was a lot of commerce going on, right?
• 19:24
  SPEAKER_00: And what happened is villagers started just saying we hate collectivization, we're all agreeing to redivide the land and we'll have our own farms, and we'll just quietly get together and pay the state, right?
• 19:38
  SPEAKER_00: And after a while, and you start forgetting this commerce bubbling up, and then local um local officials began to sort of let it run.
• 19:47
  SPEAKER_00: And basically, what happened is Deng Xiaoping was smart enough to go, oh, this seems to be working.
• 19:53
  SPEAKER_00: Let's just see how this runs, right?
• 19:56
  SPEAKER_00: And part of what was going on is we think of Dun as the sort of dominant leader of China, he was the most important figure, but he wasn't as dominant as people thought he was, outside of the thought he was.
• 20:07
  SPEAKER_00: And in fact, the CCP itself was divided.
• 20:10
  SPEAKER_00: And because it was divided, this also gave more capacity for people at the lower level to do their own thing.
• 20:18
  SPEAKER_00: Uh and the guy who I think his name was Chen Yun, who was Dong's rival, was more of an old-style Marxist.
• 20:26
  SPEAKER_00: But what they had in common was a large dose of Chinese pragmatism.
• 20:32
  SPEAKER_00: Right?
• 20:33
  SPEAKER_00: And they were both pragmatic at a basic operational level, even though that they were both Marxist, Leninist Maoists.
• 20:39
  SPEAKER_00: And these factors all came together.
• 20:41
  SPEAKER_00: And over time, what evolved was an interaction between party, state, and local action that led this commerce to start bubbling up and bubbling up and bubbling up.
• 20:52
  SPEAKER_00: And after a while, particularly after he went to Japan and saw how productive East Asians could be if you stopped getting in their way, um, and then America back, right?
• 21:03
  SPEAKER_00: They went with it.
• 21:04
  SPEAKER_00: Now, there was all sorts of ups and downs, but that's how you get a commercial turn in a society that's theoretically Marxist-Leninist and which doesn't actually legalize commerce at any sort of serious level in 2004.
• 21:23
  SPEAKER_00: Right?
• 21:23
  SPEAKER_00: It's been running seriously since 1978.
• 21:27
  SPEAKER_00: Okay, now this also, I have to go, gets the way of all those things about, well, you've got to have secure property rights.
• 21:33
  SPEAKER_00: Yes and no.
• 21:34
  SPEAKER_00: They obviously found a very Chinese way to have functional property rights, even though they weren't actually legal.
• 21:41
  SPEAKER_00: Um that complicated relationship between commerce and the state.
• 21:45
  SPEAKER_00: Now, if you think of it as capitalism and as what Dan Xiaoping did, you're actually getting the story really, really fundamentally wrong.
• 21:56
  SPEAKER_00: Um and so, yes, and it re Another way it misleads this idea of capitalism, it's the ownership of capital is crucial, it's all top-down, is as I alluded to earlier, people get the way the Western Empires worked and how you understand the Western Empires work, but because they treat trying to put it into a capitalist mode.
• 22:17
  SPEAKER_00: And you think to yourself, well, that's not right, because there have always been empires, as soon as you have states, you have empires.
• 22:24
  SPEAKER_00: And these you wouldn't call, you know, um Sargon of our CAD's empire capitalist, but it's clearly an empire, right?
• 22:34
  SPEAKER_00: And and so on and so on and so forth.
• 22:36
  SPEAKER_00: So, yes, that the terminology gets in the way.
• 22:40
  SPEAKER_00: It forces people to think about it as a unified system when it's not.
• 22:44
  SPEAKER_00: It way overemphasizes the importance of capital.
• 22:48
  SPEAKER_00: It way under emphasizes risk management, discovery, coordination.
• 22:54
  SPEAKER_00: It way underestimates the way it is a process in a society of and of networks.
• 23:01
  SPEAKER_00: Um, and commerce is just something that people keep doing, right?
• 23:06
  SPEAKER_00: Um, you know, we we used to wonder how the Soviet Union could make itself functional.
• 23:12
  SPEAKER_00: I mean it didn't, of course, but to the extent that it did, a lot of that was black markets.
• 23:17
  SPEAKER_00: So with hidden commerce, and we say, well, that's all criminal, yeah.
• 23:22
  SPEAKER_00: It actually allowed the system to get around some of its own stupidities.
• 23:26
  SPEAKER_00: Because people trade illegally, but they would trade in the way that make things function, where if they were just doing the proper Goss Plan thing, well, more or less nothing would work.
• 23:37
  SPEAKER_00: Um at least not for very long.
• 23:40
  SPEAKER_00: Um, so yes, uh uh unless you well, or afraid, I'll rephrase that slightly differently.
• 23:46
  SPEAKER_00: If you're Stalin and you wouldn't be shooting lots of people, and everyone's terrified, and you've got competing lines of information, you can sort of kind of make it work.
• 23:55
  SPEAKER_00: Um, but the minute it sort of starts regularising and all the bureaucratic problems start coming about because you have regalized it, well, you get what you get.
• 24:05
  SPEAKER_00: You get the slow, steady stagnation.
• 24:07
  SPEAKER_00: Um, but yes, so commerce is a thing people do, and if you lead them, they'll just do it.
• 24:16
  SPEAKER_00: Hmm.
• 24:17
  SPEAKER_01: When you mentioned that when people assert that if we just had individual property rights, then everything would be fixed all over the world.
• 24:29
  SPEAKER_01: That is where I do see, as someone who is in in Great Britain, the Anglo-centric worldview come out, which uh our diaspora has as well in America, Oz, uh New Zealand, exactly uh Canada, in that ultimately we've all come out of a uh an island which the law reflects the culture.
• 24:53
  SPEAKER_01: So that was something that emerged.
• 24:55
  SPEAKER_01: The law then had to uh respond to the cultural mores of the people and the demands initially of the elites, but also of just the way people did things, and that was how society ran.
• 25:06
  SPEAKER_01: It's how we interact with one another even today, and why when we feel cheated or when we see clannish practices taking place in the country, we all cry foul because it's not something we've ever done.
• 25:17
  SPEAKER_01: But because it's worked here and it's worked in the Anglosphere, and we think, well, we've we stumbled across something.
• 25:23
  SPEAKER_01: I mean, in in many respects, you could say, particularly on the legal system, we stumbled across something truly unique.
• 25:30
  SPEAKER_01: Uh however, and I don't want to get too culturally relativist on things, but in reality, is certain practices do just work better in certain places because the people are different, they've got different ways of interacting, different cultural mores, and so you can't just go foisting that system on them and expect it to work.
• 25:49
  SPEAKER_01: And whilst we're on culture, uh, you've written a really interesting uh article about popular theories of economic growth.
• 25:59
  SPEAKER_01: And it's really, really common to find and uh pretty much every economic, sorry, every election cycle talk of politicians saying we are going to supercharge growth.
• 26:12
  SPEAKER_01: We're going to, we've got this plan, and growth is coming back to this country.
• 26:16
  SPEAKER_01: We see it in the United Kingdom all the time.
• 26:19
  SPEAKER_01: Uh, you've referred to this notion as as crank the handle theories of economic growth.
• 26:26
  SPEAKER_01: What are they and why don't they work in your estimation?
• 26:31
  SPEAKER_00: Okay, yes.
• 26:32
  SPEAKER_00: I've all it's all also called the Legoland, Legoland theory grave, just assemble the blocks.
• 26:38
  SPEAKER_00: Right.
• 26:38
  SPEAKER_00: Okay, so um there's a thing called a Cobb Douglas function, which basically says you put labour and capital together and crank the handle and production comes out, right?
• 26:49
  SPEAKER_00: Um and um Robert Solo, who died not long ago, um, had this model of uh economic growth, which is basically the Cobb Douglas function, you add some parameters in and um which identifies, for example, either labor propility or multi-factor property of any how you do it.
• 27:11
  SPEAKER_00: Um and that will that will tell you the path of economic growth, right?
• 27:16
  SPEAKER_00: So once you've identified the level of labor, the level of capital, um you've identified the relevant parameters, as long as you get the right level, right rate of productivity growth, away you go, right?
• 27:28
  SPEAKER_00: Now the most obvious problem with that model is it predicts that economies will converge.
• 27:36
  SPEAKER_00: And of course they don't.
• 27:38
  SPEAKER_00: Right?
• 27:39
  SPEAKER_00: What's a problem with a mathematically expressed model that has a prediction that doesn't come true?
• 27:43
  SPEAKER_00: It should should then make you go back and go, hmm, something's wrong here.
• 27:48
  SPEAKER_01: And when you and when you say converge, this is the expectation that you can equalize the economic uh outcomes of different countries and regions if you just have the appropriate plan and investment.
• 28:01
  SPEAKER_00: Yes, right.
• 28:02
  SPEAKER_00: So if you have enough capital, enough labour, um, and you get the productivity growth aride, because it's easier to copy inventions already made than be at the cutting edge of economic growth where you've got to sort of invent new things all the time.
• 28:17
  SPEAKER_00: Uh everyone will just look what the rich people are doing, and they will copy the rich people, and everyone will converge as long as they've got enough capital, right?
• 28:25
  SPEAKER_00: That's the prediction.
• 28:26
  SPEAKER_00: Obviously, it hasn't come true, right?
• 28:29
  SPEAKER_00: Um, and I never liked it.
• 28:32
  SPEAKER_00: I never liked it because it seemed to me that it was obvious that different countries had different capacities to put labor and capital together.
• 28:42
  SPEAKER_00: We're extracting away from land.
• 28:44
  SPEAKER_00: Just let's not worry about that for the moment.
• 28:46
  SPEAKER_00: Um and even groups within companies, countries, had different capacities to uh put labor and capital together and to generate capital, for that matter.
• 29:00
  SPEAKER_00: Uh, and so it seemed to me was just not expressing what went actually on, what happened.
• 29:06
  SPEAKER_00: And then you get things like uh the gentleman who just got the Nobel Memorial for Economics, their point about the institutions really matter.
• 29:15
  SPEAKER_00: And you look at the solo model or even the amended one which adds in human capital, and you think, yeah, where are institutions in that equation?
• 29:24
  SPEAKER_00: And the answer is nowhere really.
• 29:26
  SPEAKER_00: And now we've got the long-term economic growth literature where basically what's happened since we've got this enormous computing power, what various scholars have done is they've just assembled these enormous data sets and then just said, what are the patterns we can find in these data sets?
• 29:45
  SPEAKER_00: Right?
• 29:46
  SPEAKER_00: What's there?
• 29:48
  SPEAKER_00: And what they are coming up with is culture matters.
• 29:52
  SPEAKER_00: Back to your previous point.
• 29:54
  SPEAKER_00: And for example, if you go look at where people are in 1500, and they're relatively developed for 1500, and you follow the people, not the territory, you follow the people, then they're the people who are rich now.
• 30:10
  SPEAKER_00: Right?
• 30:11
  SPEAKER_00: So who was rich in 1500?
• 30:13
  SPEAKER_00: Europe, particularly Northwestern Europe, East Asia, particularly China and Japan.
• 30:18
  SPEAKER_00: You follow the Europeans, you follow the East Asians, where they are now is where people are rich, like, for example, Australia or New Zealand or Canada or so forth, right?
• 30:31
  SPEAKER_00: Singapore, right?
• 30:33
  SPEAKER_00: Which was nothing, and now is the richest city in the world, or close to the richest city in the world.
• 30:38
  SPEAKER_00: Um so, so, and of course, culture and institutions can't entirely be separated.
• 30:44
  SPEAKER_00: And there's also all the organizational work which says, yeah, we tried running an organization we we structured for England in this country, and their culture's different, and the organization doesn't work the same, right?
• 30:57
  SPEAKER_00: Transnational corporations are wrestling with this all the time.
• 31:02
  SPEAKER_00: Um, and in fact, there's a military and analyst called Kenneth Pollock, who wrote his PhD thesis on why Arabs lose conventional wars.
• 31:14
  SPEAKER_00: Um and he's he's since updated that into two books since the Rose Russian, which is Armies of Sand.
• 31:21
  SPEAKER_00: And his thesis was basically their culture leads them to lose conventional wars.
• 31:27
  SPEAKER_00: Now, insurgencies are different, right?
• 31:29
  SPEAKER_00: They're a different matter.
• 31:30
  SPEAKER_00: But when it comes to why they're armies, which look like everyone else's armies, they've got companies, they've got battalions, they've got captains and majors and colonels, and they've got lines of command.
• 31:42
  SPEAKER_00: Structurally, they look like everyone else's armies.
• 31:45
  SPEAKER_00: They do badly in conventional warfare because of the way Arab culture works.
• 31:50
  SPEAKER_00: Now, Arabs can do insurgency warfare, they can definitely do that.
• 31:54
  SPEAKER_00: But their armies don't work, right?
• 31:56
  SPEAKER_00: What was one of the interesting result of this is when you look at Israel, you think it's not that the IDF is all that special, it's just a Western army that gets lots of practice, essentially.
• 32:05
  SPEAKER_00: Because whenever Western armies fight conventional wars against Arab armies, they beat the tar out of them.
• 32:13
  SPEAKER_00: Um, and that goes back to culture matters, and where is that in uh, you know, solo swan growth model or the updated, I can't remember the three people involved, but it's Manakriu, and there's two others I can't remember who they are, model which they've added in human capital, right?
• 32:33
  SPEAKER_00: It doesn't grasp any of that.
• 32:35
  SPEAKER_00: Yet clearly this is really, really crucial.
• 32:38
  SPEAKER_00: And my response is: look, you've got to go back to the beginnings of human economic activity, by which I mean right back to the beginning.
• 32:48
  SPEAKER_00: So when we were foragers, and when you look at how foragers operate, they there's three types of capital which are important.
• 32:54
  SPEAKER_00: One is human capital, one is physical capital, and one is social capital.
• 32:59
  SPEAKER_00: Right?
• 33:00
  SPEAKER_00: So physical capital for them is tools.
• 33:03
  SPEAKER_00: The human capital matters because if you can't make the tools, and if you can't use the tools effectively, it doesn't matter if you have tools or not.
• 33:12
  SPEAKER_00: Either the tools won't exist or you won't be able to use them.
• 33:14
  SPEAKER_00: So you have to have the human capital, you have to have the physical capital, but the other thing they do is social capital.
• 33:20
  SPEAKER_00: Social capital connections are really, really, really important for foragers.
• 33:24
  SPEAKER_00: So you can have modern foragers who walk everywhere, right?
• 33:28
  SPEAKER_00: The ha people at the Hasdo and so forth in Africa, who can have connections that extend up to 200 kilometers away.
• 33:36
  SPEAKER_00: Right?
• 33:36
  SPEAKER_00: And their mechanisms for information, for um buffering yourself against bad bad times, for uh arranging marriages, and the one thing every single marriage system in the planet has in common, in fact, the only thing every single marriage system in the planet has in common is they create in-laws.
• 33:57
  SPEAKER_00: They create relations by marriage.
• 34:03
  SPEAKER_00: And that's in these societies a really, really, really crucial aspect of marriage.
• 34:08
  SPEAKER_00: And in fact, it's why courtship, it's a big reason why courtship marriage is not a majority form of marriage in human societies.
• 34:16
  SPEAKER_00: Because that role of connecting is really, really important.
• 34:21
  SPEAKER_00: Okay, and we're normative, right?
• 34:23
  SPEAKER_00: We we have we're a normative species.
• 34:25
  SPEAKER_00: So you're looking at human capital, social capital, yes, there's a good capital matters, yeah, both tools, and you've got to look at the normative landscape, and it turns out you've got to look at the cultural landscape and you've got to look at the institutional landscape, right?
• 34:39
  SPEAKER_00: This is all gonna matter.
• 34:40
  SPEAKER_00: So if you take, why has foreign aid failed so much?
• 34:44
  SPEAKER_00: You take capital, you put it into a local area where they don't have the skill base, they don't have the connections you expect, they don't have the institutions that you expect, they're not gonna use it in the way you expect.
• 34:59
  SPEAKER_00: Um, the state is probably going to be a problem, not a benefit.
• 35:03
  SPEAKER_00: Right?
• 35:04
  SPEAKER_00: Of course, you end up, you know, your foreign aid system not working, because it's all based on this idea that, you know, if you just assemble the labor and you assemble the capital and you get the human capital job, you just can't go and all works.
• 35:16
  SPEAKER_00: That's not how human societies work, that's not how human economic growth happens.
• 35:20
  SPEAKER_00: Go back to commerce.
• 35:21
  SPEAKER_00: What's commerce about?
• 35:23
  SPEAKER_00: Discovery, coordination, risk management, connections, right?
• 35:29
  SPEAKER_00: You've got to look at all those things.
• 35:32
  SPEAKER_00: And of course, if you look at it like that, you're not gonna expect societies to converge.
• 35:38
  SPEAKER_00: Because there's a whole lot of things that are gonna have to happen, which are much more than take the labor and take the land and take the capital and put them together and away you go, right?
• 35:48
  SPEAKER_00: So, um, and this is where you become skeptical as of the sort of um just add X command things about um economic growth.
• 36:01
  SPEAKER_00: For example, if you you know have a really, really, really, really regulated land use system, then your land's not going to be moving towards most productive most productive use, is it?
• 36:13
  SPEAKER_00: If you have um if you have a system where you have a lot of interference in activities.
• 36:21
  SPEAKER_00: Like uh the tech entrepreneur Mark Anderson has a great example.
• 36:27
  SPEAKER_00: Why does China dominate the commercial drone market?
• 36:32
  SPEAKER_00: Because the US FAA decided that you couldn't make a commercial drone in the United States that operated out of line of sight of the operator.
• 36:41
  SPEAKER_00: Because, you know, something bad might happen.
• 36:45
  SPEAKER_00: All right.
• 36:46
  SPEAKER_00: Don't think they worry about that in China.
• 36:47
  SPEAKER_00: I think they just make drones.
• 36:50
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• 36:55
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• 37:03
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• 37:07
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• 37:19
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• 37:22
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• 37:25
  SPEAKER_01: Enjoy the rest of the show, classmate.
• 37:30
  SPEAKER_01: You've talked a lot about the reward mechanisms for doing things which um are part of social capital.
• 37:39
  SPEAKER_01: And you you you drew out in your article two kinds of social capital or two ways in which social capital can be afforded.
• 37:45
  SPEAKER_01: One through prestige, and that's the reward of doing the difficult things for being competent, and um and you and it's what you refer to as producing positive externalities, and then you've got the though that that is afforded by status, which is you uphold the norms of the group.
• 38:02
  SPEAKER_01: And I think we'll come on to that uh shortly, because I'd like to talk about the rise of activist uh networks, um, but the prestige angle, social capital being afforded for prestige, I think you could argue, and it links back to that final point you made about the US FAA, that we have created a world post-industrial revolution where we no longer reward people for competence for doing the risky, clever, hard, entertaining things.
• 38:35
  SPEAKER_01: To quote your article, and Elon Musk has has made this point, which is people need to build things.
• 38:43
  SPEAKER_01: And people who've defended him have said, look, if you don't want him dominating, well then go and build some stuff because that's what he's doing.
• 38:51
  SPEAKER_01: The reason why he's so successful is because he's had all of these ideas and he's taken the risks, he's come up with some clever ideas.
• 38:58
  SPEAKER_01: It's hard, but he's seen it through, and that's the way he's built.
• 39:02
  SPEAKER_01: But the rest of us, we're just thinking about regulating, we're just thinking about more bureaucracy.
• 39:07
  SPEAKER_01: And and because we have set up a whole bunch of various institutions which are geared towards more bureaucracy around the things that they care about.
• 39:19
  SPEAKER_01: That's a way that you can expand your own influence and social capital without actually doing the hard things.
• 39:25
  SPEAKER_01: But everyone in the group's pointing to each other saying, Well done, you're doing a great job.
• 39:30
  SPEAKER_01: This is exactly what we need.
• 39:31
  SPEAKER_01: And and you can see that in the European Union.
• 39:33
  SPEAKER_01: Whilst you've got the US and China fighting it out to develop AI, the EU is not doing that, they're just regulating it.
• 39:41
  SPEAKER_01: And they they take pictures of their bureaucrats looking really happy that look, we've just created this new 8,000-page regulation as to what you can and can't do.
• 39:53
  SPEAKER_01: And everyone flanking them is developing it themselves.
• 39:57
  SPEAKER_01: Um, so let's talk a little bit about how our uh economic system, our cultural uh life has come to be dominated by activists.
• 40:10
  SPEAKER_01: You wrote an article about activist network states.
• 40:14
  SPEAKER_01: What are they and why are we living in one?
• 40:16
  SPEAKER_00: Oh, well, excellent.
• 40:17
  SPEAKER_00: Yes.
• 40:18
  SPEAKER_00: Okay, so a seminal cultural moment of recent times is now uh over 10 years ago, just over 10 years ago now, November 2014, a rocket scientist does is the lead person in a very, very, very, very clever thing, which is they land a probe on a comet, which is really, really hard, and we had never done it before.
• 40:54
  SPEAKER_00: So this is the classic clever thing that the scientific revolution and the industrial revolution was built on.
• 41:01
  SPEAKER_00: You've done this really clever thing, you get prestige for doing this really clever thing.
• 41:08
  SPEAKER_00: What happens?
• 41:10
  SPEAKER_00: He happened to be wearing a Hawaiian shirt with semi-naked women on it, which turns out was actually a gift from a female friend.
• 41:20
  SPEAKER_00: He got publicly monstered and humiliated for his shirt.
• 41:29
  SPEAKER_00: Now that's the difference between prestige, the clever thing of landing on a comet, which is really hard, and we don't like your shirt because it's got semi-naked women on it.
• 41:40
  SPEAKER_00: So we are going to massively stigmatize you.
• 41:44
  SPEAKER_00: And stigma is the negative aspect of propriety, right?
• 41:49
  SPEAKER_00: And so the other, well, there's actually three status systems.
• 41:53
  SPEAKER_00: The two we're talking about here are prestige and propriety.
• 41:55
  SPEAKER_00: And stigma is the negative thing.
• 41:57
  SPEAKER_00: Now, all societies have stigma because they want to stop you doing stuff that hurts other people, right?
• 42:02
  SPEAKER_00: It's all the negative externalities.
• 42:04
  SPEAKER_00: But like everything human, it can be misused.
• 42:08
  SPEAKER_00: And what you're seeing is that's the that use of stigmatization to punish people on you know an ever-widening bunch of news sins.
• 42:20
  SPEAKER_00: You know, how you know misgendering.
• 42:25
  SPEAKER_00: That's a news sin.
• 42:27
  SPEAKER_00: Nobody knew what misgendering was in 2014, or if they did, they're a tiny minority somewhere, right?
• 42:34
  SPEAKER_00: Uh incredible sensitivity about language, news sins.
• 42:39
  SPEAKER_00: And stigmatization is being used to punish people for transgression against these new sins.
• 42:48
  SPEAKER_00: So, you know, and you get you can't, you've got to say people of colour, you can't say colored people, for example.
• 42:55
  SPEAKER_00: Now that's a status game.
• 42:57
  SPEAKER_00: That's a status leverage game.
• 42:59
  SPEAKER_00: It is power through controlling what is legitimate discourse, through controlling the legitimacy of discourse.
• 43:06
  SPEAKER_00: Okay.
• 43:07
  SPEAKER_00: And if you can and it it it's power also through narrative control.
• 43:12
  SPEAKER_00: You control the narrative.
• 43:14
  SPEAKER_00: And if you want to see that playing out, Elon Musk saying, All these girls got raped, perhaps you should worry about that.
• 43:22
  SPEAKER_00: On one hand, and all the people complaining that Elon Musk is complaining.
• 43:27
  SPEAKER_00: Right.
• 43:27
  SPEAKER_00: So there's the people who say actually industrial level rape over decades is a horrifying crime.
• 43:33
  SPEAKER_00: How did this happen?
• 43:34
  SPEAKER_00: Why aren't you talking about it?
• 43:36
  SPEAKER_00: And on the other hand, you say the people who really, really resent Elon Musk are bringing it up because they want to get narrative control or they want to get narrative control back.
• 43:45
  SPEAKER_00: And it turns out if you're Elon Musk and you've bought Twitter and sent it to X, you can insert, because you've got 200 million followers, you can insert yourself into the news cycle and you can get the news cycle.
• 43:57
  SPEAKER_00: Okay.
• 43:57
  SPEAKER_00: So that is stigmatizing.
• 44:01
  SPEAKER_00: Used successfully in the case of Shird Gate, and so far unsuccessfully against Elon Musk as a form of activism and of status control and status leverage and narrative control.
• 44:16
  SPEAKER_00: Okay, so activism is an attempt to change society in some way, and a classic way of doing activism is to stigmatize previously acceptable behavior.
• 44:32
  SPEAKER_00: And sometimes, frankly, that's fair enough, right?
• 44:35
  SPEAKER_00: When we got men and women working together in offices and professional establishments way more than they used to, actually, we did need to stigmatize men who thought they could pinch bottoms, right?
• 44:45
  SPEAKER_00: We did need to stigmatize men who thought they could leer at their female workplaces.
• 44:50
  SPEAKER_00: We did have to say, no, actually, you do have to keep your dick in your pants, right?
• 44:53
  SPEAKER_00: That sort of stigmatization was absolutely fair enough.
• 44:57
  SPEAKER_00: It had to be something to happen, and some of it took court cases and people went to jail, right?
• 45:03
  SPEAKER_00: That's a stigmatization.
• 45:04
  SPEAKER_00: We've moved to this new situation.
• 45:06
  SPEAKER_00: We've got men and women working together at a level we haven't had before, and men have to just stop doing certain things, right?
• 45:14
  SPEAKER_00: So that's reasonable stigmatization.
• 45:17
  SPEAKER_00: Now, a lot of what's happened since is they've taken this weapon that has some value and has existed and evolved because of that value, and then turned it into a weapon of social leverage and social activism.
• 45:33
  SPEAKER_00: And because we're very prosperous societies, we've developed the whole set of stuff that's based on that sort of activism.
• 45:42
  SPEAKER_00: One is all the nonprofits, right?
• 45:44
  SPEAKER_00: All the advocacy groups.
• 45:46
  SPEAKER_00: And part of when what happened there is you know, civil rights got to achieve for African Americans in the United States, civil rights got to achieve for women and equality for law, civil rights got achieved for gay and lesbian people, an equality for law, and they can get married, they can adopt, right?
• 46:03
  SPEAKER_00: Okay.
• 46:04
  SPEAKER_00: But these organizations have millions and millions and millions of dollars flowing through them and suddenly nothing to do.
• 46:11
  SPEAKER_00: Right?
• 46:12
  SPEAKER_00: What do they do?
• 46:12
  SPEAKER_00: Well, they just pivot to something else, and what they pivoted to was trans.
• 46:16
  SPEAKER_00: And one of the, well, what the good gay lesbian organizations pivoted to was trans.
• 46:20
  SPEAKER_00: And part of the problem there is there were two huge problems.
• 46:23
  SPEAKER_00: Everyone thought, well, this is just like the gay issue when it's really, really, really not.
• 46:29
  SPEAKER_00: And they use the gay model when it's a really, really different case.
• 46:34
  SPEAKER_00: Um, and so you've got this massive advocacy economy, which needs to keep the donors, the donations flowing, has all this structure, and is based on activism, and it's the natural lever they use is stigmatization.
• 46:49
  SPEAKER_00: And of course, social media makes this much more potentially much more effective.
• 46:56
  SPEAKER_00: Right.
• 46:56
  SPEAKER_00: So you've got a situation recently where um I think it's the CEO of the therapeutic association in the UK had to publicly abase himself because it was found that he was following Tommy Robertson on Twitter or on X.
• 47:12
  SPEAKER_00: That's a utterly spurious sin used in stigmatization.
• 47:18
  SPEAKER_00: So you have this, you have this network where stigmatization is an easy mechanism, and social media really makes you able to scale up that mechanism.
• 47:30
  SPEAKER_00: And one of the problems with social media is you're only dealing with slivers of people, right?
• 47:34
  SPEAKER_00: If you're actually physically with somebody, you see the full person.
• 47:37
  SPEAKER_00: This is a full person, you get the whole interactions, it's a much, and it's also sort of something we've evolved for to deal with for you know hundreds of thousands of years.
• 47:46
  SPEAKER_00: Right.
• 47:47
  SPEAKER_00: Online, you're just dealing with a sliver of a person.
• 47:50
  SPEAKER_00: It's not the same feedback at all.
• 47:54
  SPEAKER_00: So a lot of the ameliorating factors and pacifying humanizing factors go away.
• 48:00
  SPEAKER_00: And it you know, upgrades, scales up stigmatism, and that's an easy, easy, easy mechanism for activists.
• 48:07
  SPEAKER_00: But there's also other things going wrong on, sorry, will go wrong too.
• 48:11
  SPEAKER_00: What we've done is we've moved from a situation where bureaucrats just made things work to where they have these moral projects.
• 48:21
  SPEAKER_00: You don't give bureaucrats moral projects for several reasons, one of which it gives them airs and pretensions way below in their capacities, it inflates their authority, and it undermines accountability.
• 48:35
  SPEAKER_00: Because if they say we're doing X to do this good thing, and you say, Well, I think you shouldn't be doing X, their response is, you don't want us to do this good thing.
• 48:45
  SPEAKER_00: What I call the actor's fallacy.
• 48:47
  SPEAKER_00: So it undermines accountability, it inflates their authority, uh, and they and it also, you know, how do you measure this moral project?
• 48:56
  SPEAKER_00: When do you know it's worked?
• 48:58
  SPEAKER_00: And again and again, you can't tell it's worked, uh, because there is no good measure.
• 49:03
  SPEAKER_00: Okay.
• 49:04
  SPEAKER_00: And so people like Christopher Caldwell and Richard Hunner, who point out that anti-discrimination in civil rights legislation has proved to be a real problem because it's created this whole legal bureaucratic structure, which is based on the presumption that if you don't have this legal bureaucratic structure, everybody's hand hovering on the end of wrong action and wrong think.
• 49:28
  SPEAKER_00: Um, and you've undermined freedom of association.
• 49:30
  SPEAKER_00: You've engaged in all this forced association.
• 49:33
  SPEAKER_00: Uh, and if you look back at human societies, uh who you choose or choose not to associate is actually an important mechanism.
• 49:40
  SPEAKER_00: And of course, you know, people can exclude people quite illegitimately.
• 49:45
  SPEAKER_00: That's absolutely true, uh, particularly in small communities.
• 49:50
  SPEAKER_00: Um but systematic forced association is turning out to be a problem too, because people can't step back from what they regard as bad behavior.
• 50:00
  SPEAKER_00: Um and uh and you've created this, you know, embedded network of people on the presumption that if you, you know, if you if they weren't there, everyone would become raging, raging homophobes and raging racists and raging whatever's right.
• 50:18
  SPEAKER_00: That's just rubbish.
• 50:19
  SPEAKER_00: Right.
• 50:20
  SPEAKER_00: Once the crucial thing was in fact the change in the stigmatization.
• 50:23
  SPEAKER_00: Once you stop stigmatizing people because they were black, or stigmatizing people who were gay, you you eliminated that stigmatization.
• 50:32
  SPEAKER_00: That did the overwhelming majority of the work.
• 50:36
  SPEAKER_00: And this complicated, expensive structure is actually doing way more harm than good because it's interfering in ways, it's you know it leads directly to all the DEI nonsense, for example.
• 50:50
  SPEAKER_00: So it gets in the way of people just functioning and getting along.
• 50:55
  SPEAKER_00: And so you've creating these activist structures, and the incentive is constantly to target the bureaucracies, because then you don't have to go through the boring stuff of convincing voters and arguing your case and so forth.
• 51:12
  SPEAKER_00: You go bar the bureaucracy.
• 51:14
  SPEAKER_00: It's what the writer Wesley Yang calls the uh non-electoral politics of institutional control.
• 51:22
  SPEAKER_00: That's not quite the right phrase, but it's a phrase like that.
• 51:24
  SPEAKER_00: Uh and that's a problem.
• 51:26
  SPEAKER_00: And one of the things you get, for example, is you the UN, which is completely unaccountable.
• 51:32
  SPEAKER_00: Like you get people laundering ideas for the UN, which are typical terrible ideas.
• 51:38
  SPEAKER_00: They go to the UN, they get written up by the UN, and then everyone says, Well, we should do this because the internet disagree, right?
• 51:45
  SPEAKER_00: It's you're doing end run around democratic accountability.
• 51:49
  SPEAKER_00: That's one of the big, big problems of the EU.
• 51:52
  SPEAKER_00: The EU's a little bit more accountable than the UN.
• 51:55
  SPEAKER_00: Quite a lot more accountable because the UN, completely unaccountable, but it's still the accountability is still not very good.
• 52:01
  SPEAKER_00: So you're getting the EU being used to launch these ideas and do end runs around democratic accountability, which goes back to your 5,000-word regulatory document, which has not been subject to anywhere near the examination that they should be subject to.
• 52:20
  SPEAKER_00: And these regularly claims are based on claims of we know that, which are almost in very spurious.
• 52:27
  SPEAKER_00: They don't know, right?
• 52:30
  SPEAKER_00: But their status comes from being the superiorist deciders.
• 52:33
  SPEAKER_00: And if you give them a moral project, that makes that much worse.
• 52:37
  SPEAKER_00: You know, the European project inflates the authority quite illegitimately of what the EU gets up to.
• 52:46
  SPEAKER_00: So you've got these networks of um, you know, and academe, of course, generates all these ideas from people who also don't have to make things work.
• 52:58
  SPEAKER_00: There's a constant problem of the ideas coming out of academia because it's been done by people who don't have to make things work, but can get this spurious prestige from this golden idea.
• 53:13
  SPEAKER_00: Um, and that's been just a perennial problem.
• 53:16
  SPEAKER_00: It's been a problem for decades amongst education faculties, for example.
• 53:22
  SPEAKER_00: Teachers have been full of really dumb ideas uh which don't work, which were not reality tested, um, but which inflated the egos of the um of the uh academics, either on the basis of I've got this rigid idea that no one else has thought of before, that's because it doesn't work, um, or we're going to change society in this dramatic and wonderful way, which sanctifies activism.
• 53:51
  SPEAKER_00: So you've got this sanctification of activism, this generation of ideas, of morally inflating ideas, you've got these moral inflating of the authority of bureaucrats way beyond their levels of knowledge and competence.
• 54:03
  SPEAKER_00: You've got this undermining and these end runs around um democratic accountability.
• 54:11
  SPEAKER_00: So we end up with a situation in Britain, for example, where Britain has a really stupid and disastrous migration policy that the electorate has never approved of, never agreed to, and the end runs around democratic accountability have just been endless.
• 54:30
  SPEAKER_00: The British elite has just, the political class has just systematically lied.
• 54:36
  SPEAKER_00: Because they just know, and it turns out they just didn't, that in fact the electorate was correct and the elite was wrong.
• 54:45
  SPEAKER_00: Um, yeah, democratic accountability isn't perfect, but it turns out it's a lot better than the lack of it.
• 54:51
  SPEAKER_00: Um and yes.
• 54:53
  SPEAKER_01: And so I I was going to say that uh your point about the um immigration policy, which has been a disaster and never formally approved by anyone, um, and usually on the basis that in the end people become just like us, is totally refuted even if you look at the UK Home Office, which has um all of these networks that you talk about.
• 55:22
  SPEAKER_01: So typically set up with progressive ideals, you get multicultural networks so people can set up their own nodes in to advance the interests, whether it's of their ethnic group, whether it's of their religion.
• 55:34
  SPEAKER_01: And there's a 700-strong Muslim network within the home office that advocates for policy change to um enable the achievement of Muslim needs.
• 55:47
  SPEAKER_01: That that clearly tells you that integration is not on the menu, but because clearly that's counter to whatever came before the arrival of that network and indeed um that group of people.
• 56:00
  SPEAKER_01: And it's not just Muslims either.
• 56:02
  SPEAKER_01: I mean, we see the Conservative Party aligning with the Hindu vote, um, which uh puts them at odds with Labour, who typically try to align with the Muslim vote.
• 56:13
  SPEAKER_01: And this is just goes on and on.
• 56:15
  SPEAKER_01: So it's not even just about advancing progressive ideals at this point, is we've blinded ourselves to this so much that we don't even see when groups are trying to advance their own religious and ethnic glory that uh any sense of institutional neutrality is absolutely um pulled apart on this.
• 56:34
  SPEAKER_01: And indeed, there's probably no such thing as a neutral institution because you always have friend and enemy distinctions, and we might cloak it up in certain languages, but in reality, you can pretty much always find out which team someone's someone's batting for in the end.
• 56:50
  SPEAKER_01: And I suppose there are many people in the country who are saying, well, if we're seeing this, unless we get on top of it, we really could see some quite um um uh substantial rewiring of the British state away from its um its emergent constitutional settlement that has taken place over such a long time.
• 57:15
  SPEAKER_01: I mean, you could argue that that changed when Tony Blair walked into office and perhaps at various times in the 40s and 60s, but let's just go with we've now got a bunch of different peoples with their own interests, they're now advancing them.
• 57:28
  SPEAKER_01: And this then leads people to, and here's here comes a segue to talk about another one of your articles.
• 57:35
  SPEAKER_01: It leads people to go, well, this could be the end.
• 57:38
  SPEAKER_01: This could be the end of Britain as we know it.
• 57:42
  SPEAKER_01: And it all came from the fall of the empire.
• 57:45
  SPEAKER_01: We've we've just unraveled since that point, and that leads us on to a previous episode that I've had with authors of a book, Why Empires Fall, by Peter Heather and John Rapley.
• 57:57
  SPEAKER_01: Peter Heather is a historian uh of antiquity and John Rapley, a development economist.
• 58:04
  SPEAKER_01: And they suppose or propose that the fall of an empire and particularly the fall of Rome could not just be understood because of a large influx of peoples from outside of Rome and from outside the empire, i.e., non-citizens or subjects, but they they go on to advance that any coming apart of a of a of an empire, and then it blurs a bit, it gets into civilization and nation, is through um uh a bureaucratic overreach in some respects, which I suppose we see and could agree with, but also because of um financial indebtedness, having lived beyond that means, but then also through the trade with those on the periphery of the empire, we've raised their ability.
• 58:55
  SPEAKER_01: Um they have now become rivals, and so they tried to um I suppose diminish the importance that was placed upon the Edward Gibbon fall of the Roman Empire model of barbarian invasion led to the fall, and said, actually, there's a whole bunch of other things over here that would have more likely caused it.
• 59:17
  SPEAKER_01: So you have disputed not all of it, but part of it.
• 59:22
  SPEAKER_01: What what's right in there?
• 59:24
  SPEAKER_00: What's wrong in there?
• 59:26
  SPEAKER_00: Okay, yes.
• 59:27
  SPEAKER_00: So um the other, well the effectively essays of mine are all on my own Substack, which is Lorenzo Lorenzo from Oz.
• 59:35
  SPEAKER_00: I did a review essay on Helen Dale's substack of this book because I was interested in the book.
• 59:43
  SPEAKER_00: I got it and gimmed it and started reading it, and realized I really seriously disagree with aspects of it.
• 59:49
  SPEAKER_00: Now, I should preface that by saying uh Hela Heather has written a good book on the fall of the Roman Empire.
• 59:59
  SPEAKER_00: I thought Ward Burkin's book, which came out at all about the same time, was better, but it was a good book.
• 1:00:04
  SPEAKER_00: He's written a very interesting book on the post-Roman barbarian civilizations and states, which I'm still in the process of reading.
• 1:00:13
  SPEAKER_00: And one thing he is very good at is discussing the interaction between Rome and its periphery.
• 1:00:20
  SPEAKER_00: Right, so you get the Roman Empire, it unifies the Mediterranean literal, the Mediterranean coast, extends as far as Britain, Roman Britain, which is essentially modern England, uh, and the Rhine, the Rhine Valley of the Danube.
• 1:00:35
  SPEAKER_00: The Rhine and the Danube basically forms its border.
• 1:00:38
  SPEAKER_00: And on the other side of the border, because you have this developed large state, you develop people who trade with the Romans, who in various ways copy the Romans, but also periodically raid the Romans because they're the rich people, right?
• 1:00:58
  SPEAKER_00: They've got the stuff, and the Romans have this complicated business of frontier wars, river navies, punitive expedition, major wars, where they manage to varying degrees and mostly pretty successfully, their interaction with these people, who nevertheless are developing as time goes on.
• 1:01:20
  SPEAKER_00: And that was a very interesting and useful discussion.
• 1:01:25
  SPEAKER_00: There are some aspects of it that I thought were much less useful.
• 1:01:30
  SPEAKER_00: One is one of the features of the Roman Empire is um at the end of what's known as the crisis of the third century, it becomes hugely more bureaucratic, particularly under the Emperor Diocletian, who stabilizes the empire after this period of flux and civil wars and short-run emperors, most of whom got murdered.
• 1:01:53
  SPEAKER_00: Um stabilizes the empire.
• 1:01:56
  SPEAKER_00: But one of the ways he stabilizes the empire is by incredibly increasing the bureaucracy because he shifts to an in-kind taxation system more, far more, which requires more bureaucrats than what they had earlier.
• 1:02:08
  SPEAKER_00: They had a lot of self-governing cities, it was a very commercial empire, and most of their tra most of their income came from silver mines and customs students.
• 1:02:18
  SPEAKER_00: And it was an empire that didn't take very many people to run, really, because the cities were mainly self-governing.
• 1:02:23
  SPEAKER_00: So, not including the imperial household, there were about 300 full-time civil servants running the empire.
• 1:02:31
  SPEAKER_00: Because when you appointed a rich equity to one of their provinces or rich senage to one of their provinces, they bring their own staff.
• 1:02:38
  SPEAKER_00: And, you know, it's an urbanized civilization.
• 1:02:41
  SPEAKER_00: Yeah, most people live in the countryside, but the cities are really what matters for organization, they're self-governing, right?
• 1:02:46
  SPEAKER_00: Away you go.
• 1:02:47
  SPEAKER_00: You don't actually need much administrative structure.
• 1:02:50
  SPEAKER_00: Um, the British Raj in India, right, is like is not dissimilar.
• 1:02:55
  SPEAKER_00: There weren't actually all that many civil servants running the British Raj.
• 1:02:59
  SPEAKER_00: Uh, but he bureaucratises, he massively increases the bureaucracy.
• 1:03:04
  SPEAKER_00: And although Rapley and Heather admit that a the the empire was less economically integrated and that the cities were in retreat, and the self-government of the cities was being undermined by this imperial bureaucracy, which was imperial in all sorts of ways.
• 1:03:25
  SPEAKER_00: Uh, apart from that, they don't really treat the bureaucracy as a major factor, which is, to my mind, complete nonsense.
• 1:03:33
  SPEAKER_00: Because when you go from a central bureaucracy of about 300 people to a bureaucracy of 30,000 or thereabouts, so it's ground by or as a magnitude.
• 1:03:45
  SPEAKER_00: That's way more expensive.
• 1:03:48
  SPEAKER_00: And we can tell from things like ice cores and lead in ice cores and so forth, the economic activity of the empire had fallen.
• 1:03:58
  SPEAKER_00: So you've got less economic activity, which is one reason why you're going for more income taxation.
• 1:04:03
  SPEAKER_00: You've got a lot more bureaucrats, which means that a lot of that revenue is eaten up by the process of administration, which means that the imperial state is just less effective.
• 1:04:16
  SPEAKER_00: And one of the things you can see really clearly if you look at the history of the empire, the imperial state of the fourth and fifth centuries is considerably less capable than the imperial state of the first and second centuries.
• 1:04:32
  SPEAKER_00: And one of the one of the big signs of that is the roads start deteriorating.
• 1:04:37
  SPEAKER_00: Um, because the cities are shrinking, they're becoming dominated by bureaucracy, they don't have much the trade has fallen, they don't have as much incentive to keep the roads going, you don't have the spare resources to do so anyway.
• 1:04:51
  SPEAKER_00: And of course that helped hurts trade, which hurts integration in the economy of the empire.
• 1:04:58
  SPEAKER_00: So this structure is crucially important in the way the empire became less effective.
• 1:05:07
  SPEAKER_00: Now, I don't want, I don't, there is a sort of line of argument by you know the Roman Empire became totalitarian.
• 1:05:14
  SPEAKER_00: I think that's a complete misuse of the terminology and shouldn't go there.
• 1:05:17
  SPEAKER_00: The bureaucracy just got a lot more expensive, and as a result, the state became a lot more less capable and became much more of a coordination problem, which is why the empire ends up splitting.
• 1:05:31
  SPEAKER_00: Because to manage a bureaucracy of 300 people is one thing, to manage a bureaucracy of 30,000 people with the technology of the time is a completely different exercise.
• 1:05:43
  SPEAKER_00: And we can tell it mattered because what does Diocletian do?
• 1:05:46
  SPEAKER_00: He sets up the Tetarchy, Tetarchy, I can't pronounce it.
• 1:05:50
  SPEAKER_00: Four people, basically, there's two Augustae and there's two sense, there's two Caesars, and the four of them run the empire between them.
• 1:05:57
  SPEAKER_00: Right?
• 1:05:57
  SPEAKER_00: What does that tell you?
• 1:05:59
  SPEAKER_00: He's in Admitting that that huge bureaucracy is a much bigger coordination problem.
• 1:06:06
  SPEAKER_00: And so you get the empire divided, then comes back together and divides and comes back together and then divides again, right?
• 1:06:10
  SPEAKER_00: After Theodosis the Great, it's always divided.
• 1:06:14
  SPEAKER_00: Because it is less capable, it's much harder to manage.
• 1:06:20
  SPEAKER_00: Yes.
• 1:06:20
  SPEAKER_00: So that structure of a bureaucracy that's much more expensive and gets in the way of stuff is an important dynamic.
• 1:06:32
  SPEAKER_00: And bureaucracies are just not machines.
• 1:06:34
  SPEAKER_00: You just don't wind them up and they go.
• 1:06:36
  SPEAKER_00: Bureaucracies have pathologies.
• 1:06:39
  SPEAKER_00: And if you're not careful, the pathologies get worse over time, which fairly clearly did happen in the Roman Empire.
• 1:06:45
  SPEAKER_00: And I can tell you, absolutely happens under every uh Chinese imperial dynasty.
• 1:06:51
  SPEAKER_00: If you look at the big unified dynasties, the bureaucracy is much worse at the end of the dynasty than it is at the beginning of the dynasty.
• 1:06:59
  SPEAKER_00: Because bureaucracies have pathologies.
• 1:07:02
  SPEAKER_00: And if you're not careful, the normal thing to happen is for the pathologies of bureaucracy to get worse over time.
• 1:07:11
  SPEAKER_00: So what happens with the empire is they became less and less able to manage this interaction.
• 1:07:18
  SPEAKER_00: Trade levels have fallen because you've had two huge plagues, the Antonine plagues and the Cyprian plagues.
• 1:07:25
  SPEAKER_00: Population has fallen.
• 1:07:28
  SPEAKER_00: The silver mine production has collapsed.
• 1:07:31
  SPEAKER_00: So you're having a real problem with your monetary system.
• 1:07:35
  SPEAKER_00: Now, in the book, they say, well, the demands of the new Sassanid Empire, which replaced the Parthians, which was much more efficient and aggressive, which it was, increased the demand for spend money on the army, the Roman army to guard this border against this much more aggressive state, which it was genuinely, it is genuinely a problem.
• 1:07:57
  SPEAKER_00: I mean, they lost an entire army and an entire with the emperor captured by the Persians, right?
• 1:08:04
  SPEAKER_00: It only ever happened once where you've got an empire, emperor captured by your enemy.
• 1:08:07
  SPEAKER_00: So they lost the entire army and the emperor at the Battle of Edessa, because Sharp the Great was a very effective military figure.
• 1:08:13
  SPEAKER_00: Okay.
• 1:08:19
  SPEAKER_00: Using to stand on him to get on his horse.
• 1:08:22
  SPEAKER_00: Okay, and when he died, they skinned him and they hung up his skin as a souvenir in the palace.
• 1:08:27
  SPEAKER_00: Okay.
• 1:08:28
  SPEAKER_00: Central Eurasian plasterist dynasties, they're fun.
• 1:08:32
  SPEAKER_00: Okay.
• 1:08:33
  SPEAKER_00: Um, yeah, history, it's all great stuff.
• 1:08:40
  SPEAKER_00: Um so yes.
• 1:08:42
  SPEAKER_00: But when you look at the actual um the because we've got all these Roman coins, we can measure how much silver's in them, right?
• 1:08:49
  SPEAKER_00: When you look at the silver in coin, it's quite clear that the silver content of the coins collapsed before the Sassanid dynasty took over.
• 1:09:00
  SPEAKER_00: And that well, I would argue that that was part the cause.
• 1:09:03
  SPEAKER_00: Because if the silver production collapses because you're going deeper and deeper, and you have these plagues, and your slave miners all die because they're traveled together in horrible conditions, and there's slaves and the mines flood, which they did, and you can't get the silver anymore, and you've got to debase your coinage.
• 1:09:23
  SPEAKER_00: But that means, of course, that you were exporting silver as a trade system, your silver went into the Indian trade system.
• 1:09:31
  SPEAKER_00: We know, because there's lots of Roman coins been dug up in India.
• 1:09:36
  SPEAKER_00: Right?
• 1:09:36
  SPEAKER_00: This trade flow stops, or doesn't completely, but craters really badly.
• 1:09:43
  SPEAKER_00: Trade is a crucial revenue base.
• 1:09:46
  SPEAKER_00: So you get all these Indian Ocean states that either go into retreat or collapse.
• 1:09:51
  SPEAKER_00: Meanwhile, the Han Dynasty is collapsing at the same time, and you've got this other trade system, which is you can't grow horses in China because the soil's short selenium.
• 1:10:05
  SPEAKER_00: So the the basic thing is that the Chinese would export silk and they'd buy horses, and then that silk would then transfer, be traded, some of that silk would be traded further through the Parthians and the Cushans into the Roman Empire, right?
• 1:10:21
  SPEAKER_00: So you've got these two trade systems collapsing at the same time, and what happens, you know, the Cushion Empire falls over, the Han dynasty falls over, the Parthian Arascid dynasty gets overthrown by the Persian Sassanid dynasty, right?
• 1:10:37
  SPEAKER_00: And Rome falls into the price of the third century.
• 1:10:41
  SPEAKER_00: Rome survives because it's still got the Mediterranean Sea, and that's a trade base they can keep going with, right?
• 1:10:47
  SPEAKER_00: But so that's all going on, and that then the knock-on effect is you can't run this commercialized trade system like Houston, so you have income taxation, so you have a much bigger bureaucracy, so you're subject to the pathologies of bureaucracy, so your state becomes less capable.
• 1:11:05
  SPEAKER_00: And then this is a very different pattern than when they're suggestion, right?
• 1:11:12
  SPEAKER_00: Um, and the reason why the people on the periphery get more aggressive is they've learned all these things from the Romans, and the Romans are less of a trade power than they used to be.
• 1:11:25
  SPEAKER_00: So if you can't get their stuff by trading them, you get their stuff by raiding them.
• 1:11:30
  SPEAKER_00: And so raiding countries shoots up and aggression shoots up, and these German states are now bigger and better organized than they used to be, and they're more of a threat.
• 1:11:42
  SPEAKER_00: So you get the Battle of Andrianopol, for example, where the Eastern Roman field army and the Eastern Emperor get killed by the Goths.
• 1:11:52
  SPEAKER_00: Now, there's a lot of nonsense talked about this battle.
• 1:11:55
  SPEAKER_00: People say stupid things like it's the triumph of cavalry, right?
• 1:12:00
  SPEAKER_00: The Romans had lost Crassus' army in 54 BC or whatever it was, to an overwhelmingly Parthian cavalry army.
• 1:12:07
  SPEAKER_00: They'd lost the Larian's army in Edessa to an overwhelmingly cavalry Persian army.
• 1:12:12
  SPEAKER_00: If you look at the Battle of Andrianopol, it's just a repeat of Cannae, where the Hannibal destroyed an entire consular army and killed two consuls, right?
• 1:12:21
  SPEAKER_00: It's basically the same.
• 1:12:22
  SPEAKER_00: You pin the Roman infantry, you use your cavalry to strip their cavalry, you've pinned the infantry, your cavalry comes back, hits them in the rear, it's a horrible mascot.
• 1:12:31
  SPEAKER_00: The only difference was Andrianopol is they used a wet a wagon lager instead of a clever infantry formation.
• 1:12:38
  SPEAKER_00: It's the same deal.
• 1:12:39
  SPEAKER_00: It's can they repeat it?
• 1:12:41
  SPEAKER_00: What the significant thing about this battle was is that the Germanic peoples can now organize effective armies and battles at the same scale the Romans can, and they can win.
• 1:12:57
  SPEAKER_00: Now, here's the problem: it's a lot cheaper to put a Germanic warrior in the field than it is to put a Roman soldier in the field because you've got this great big bureaucratic tail.
• 1:13:10
  SPEAKER_00: And uh, if you know operationally you've lost your advantage, but your soldiers are much more expensive.
• 1:13:19
  SPEAKER_00: I can tell you what's going to happen over time.
• 1:13:21
  SPEAKER_00: Over time, you're going to lose.
• 1:13:24
  SPEAKER_00: You can get away with having expensive soldiers only if you're operationally much more effective.
• 1:13:31
  SPEAKER_00: All right.
• 1:13:32
  SPEAKER_00: So that, I mean, there is a story about Rome and the periphery here, but it is also a story about decay within the Roman Empire, the problems of bureaucracy, the problems of falling economic activity, um, and that's and just becoming expensive, right?
• 1:13:49
  SPEAKER_00: Um, the Romans decided to use cavalry a lot more, every cavalry a lot more.
• 1:13:54
  SPEAKER_00: But they didn't change their system.
• 1:13:56
  SPEAKER_00: So this heavy cavalry, right, you taxed people, you paid the heavy cavalry, you bought their equipment, you trained them, you paid them.
• 1:14:04
  SPEAKER_00: It was all very bureaucratic.
• 1:14:06
  SPEAKER_00: Right.
• 1:14:08
  SPEAKER_00: Most states from about 600 BC to about 1500 later, 1800 AD.
• 1:14:17
  SPEAKER_00: If they wanted heavy cavalry, most states, what they did is they got the cavalry guy to extract the income of the local peasants himself to pay for his own equipment, to pay for his own training, and then he would provide his services for his lord.
• 1:14:36
  SPEAKER_00: Notice that's massively economizing on the administrative structure.
• 1:14:39
  SPEAKER_00: But that doesn't take much bureaucracy, it takes very little bureaucracy.
• 1:14:42
  SPEAKER_00: You're getting the guy to do it himself.
• 1:14:45
  SPEAKER_00: That's how the Parthians did it, that's how the Sassanids did it, and the Romans are trying to do it for this expensive bureaucratic structure, and it doesn't work.
• 1:14:52
  SPEAKER_00: Um, so you've got to you've got to think of those terms.
• 1:14:56
  SPEAKER_00: And the migrations into the empire were deadly because you had this expensive bureaucracy which was inefficient compared to the alternative, which is a Germanic warrior, takes a state, provides his services.
• 1:15:14
  SPEAKER_00: No bureaucracy required.
• 1:15:16
  SPEAKER_00: Um, and you get local people who this increasingly expensive and decreasingly effective bureaucracy is effectively oppressive.
• 1:15:26
  SPEAKER_00: And you get this new Germanic warlord turns up and says, I've got a deal for you.
• 1:15:30
  SPEAKER_00: By the way, I've got all the unfurked blokes anyway, so right.
• 1:15:35
  SPEAKER_00: And so you get that local interest being married to some Germanic warlord, and everyone deciding they can do about the imperial bureaucracy, which clearly for the next how many centuries they did.
• 1:15:49
  SPEAKER_00: So you've got to think of those terms.
• 1:15:51
  SPEAKER_00: Now, the other thing they get wrong is their understanding of how the West got rich and the problems of contemporary Western society.
• 1:16:01
  SPEAKER_00: Now, there's they're obsessed with an analogy that they don't pick the analogies that are there, and they're obsessed with the analogies that aren't there.
• 1:16:10
  SPEAKER_00: So one of the analogies that isn't there is they have this really silly passage or section where they try and compare the fall of Roman Britain to Brexit, which is just ridiculous, right?
• 1:16:24
  SPEAKER_00: What happened in Roman Britain is you've got this overstressed, increasingly inefficient, increasingly not fit for purpose bureaucracy that doesn't have the revenue to protect Britain, so it abandons Britain.
• 1:16:38
  SPEAKER_00: But the British society, it doesn't have local organizational structures that are worth anything, it doesn't have military troops that are worth anything much.
• 1:16:47
  SPEAKER_00: It's just abandoned.
• 1:16:49
  SPEAKER_00: And they try and sort of cobble together something locally, which mostly doesn't work.
• 1:16:56
  SPEAKER_00: And you know, whoever Arthur was based on was a sort of reflowering that fell over.
• 1:17:01
  SPEAKER_00: And, you know, the Welsh were the only bit left by the time the Anglo-Saxons had turned up.
• 1:17:06
  SPEAKER_00: Um to compare that with a completely coherent British polity deciding that wasn't going to be in the EU anymore is just ridiculous.
• 1:17:17
  SPEAKER_00: They have nothing in common except they're not part of the system anymore.
• 1:17:21
  SPEAKER_00: But if you want to look at Brexit, the first Brexit isn't Roman Britain being abandoned by the Imperial authorities.
• 1:17:27
  SPEAKER_00: The first Brexit is Henry VIII deciding he's not going to be part of the capital system anymore, right?
• 1:17:33
  SPEAKER_00: Um I remember Rob Starkey saying very darkly that a whole lot of Hurricane acts had to be repealed so Britain could join the EU.
• 1:17:41
  SPEAKER_00: Um so, yes.
• 1:17:43
  SPEAKER_00: So that's a stupid analogy.
• 1:17:47
  SPEAKER_00: The idea, which they actually say at one point that Europe got rich by the transfer of wealth from less developed areas, is just not true.
• 1:17:56
  SPEAKER_00: Now it's perhaps a little bit more obviously true if you're Australian.
• 1:18:00
  SPEAKER_00: Because Australia has always been a farm in a quarry.
• 1:18:03
  SPEAKER_00: We're still a farm in a quarry, there's other things we do, but basically, when it comes to our exports, we're a farm in a quarry.
• 1:18:09
  SPEAKER_00: We've always been a farm in a quarry.
• 1:18:11
  SPEAKER_00: We're richer than the British.
• 1:18:13
  SPEAKER_00: Why are we richer than the British?
• 1:18:15
  SPEAKER_00: Because our institutions work better.
• 1:18:17
  SPEAKER_00: Why did Singapore become rich?
• 1:18:19
  SPEAKER_00: Because they built institutions.
• 1:18:21
  SPEAKER_00: Li Kwan Yu looked at England and said, I like the way the English do things.
• 1:18:25
  SPEAKER_00: We're going to do a Chinese version of that in Singapore.
• 1:18:29
  SPEAKER_00: And it worked.
• 1:18:30
  SPEAKER_00: Just like a Chinese version of that in Hong Kong worked.
• 1:18:34
  SPEAKER_00: Um, and just like a lot of more Chinese version of copying the West worked in Taiwan.
• 1:18:40
  SPEAKER_00: Right.
• 1:18:41
  SPEAKER_00: And, you know, Susan Zikama doing the same sort of copying exercise, but adapting it to local conditions, which is really important, worked in Botswana.
• 1:18:51
  SPEAKER_00: Um, it helped that he was effectively the hereditary monarch of the largest tribe.
• 1:18:56
  SPEAKER_00: That, you know, it's certainly helpful.
• 1:18:58
  SPEAKER_00: Um, but and you know, Botswana, there's there's the main tribe, which is about 80% of the population, there's all these tiny tribes.
• 1:19:06
  SPEAKER_00: So the main tribe doesn't feel itself bothered, you know, it doesn't feel threatened.
• 1:19:10
  SPEAKER_00: It's confident that, you know, it it's 80% under a completely democratic system, right?
• 1:19:16
  SPEAKER_00: Okay.
• 1:19:17
  SPEAKER_00: Um Kenya's functional sort of much the same way.
• 1:19:19
  SPEAKER_00: The Kikuyu are such a huge patel version of Kenya, they don't feel threatened, right?
• 1:19:22
  SPEAKER_00: So they can even have a non-Kakuyu president and it's it's fine.
• 1:19:26
  SPEAKER_00: Um so that makes a difference.
• 1:19:30
  SPEAKER_00: But nevertheless, you know, if you can adapt the European institutions to your own system, you can get rich by Europe like Europeans.
• 1:19:39
  SPEAKER_00: It's the institutional structure that counts.
• 1:19:42
  SPEAKER_00: I mean, the a cop a comparison we're always making, Portugal was the, you know, Spain were the first off the mark within maritime empires.
• 1:19:52
  SPEAKER_00: It had a maritime empire compared to itself, which was very large for a long time.
• 1:19:58
  SPEAKER_00: It's the last one to get to lose it or just give up its maritime empire, which it didn't do until the 70s.
• 1:20:05
  SPEAKER_00: It's the poorest country in Western Europe.
• 1:20:09
  SPEAKER_00: Conversely, Switzerland, right, landlocked, absolutely never had an empire.
• 1:20:18
  SPEAKER_00: But leaving aside sort of weedle cases like Monaco and Luxembourg, is the richest country in Western Europe.
• 1:20:25
  SPEAKER_00: Right?
• 1:20:26
  SPEAKER_00: This gets back to why capitalism is a bad terminology.
• 1:20:31
  SPEAKER_00: Because empires are what states do.
• 1:20:36
  SPEAKER_00: And the idea that an empire is a benefit to your local economy is false.
• 1:20:44
  SPEAKER_00: And you can really, really see this with the Iberian empires, right?
• 1:20:48
  SPEAKER_00: Because, yes, the bullion flows from the Americas was a huge boon to the Spanish and Portuguese crowns, particularly the Spanish crown, which basically lived off American silver.
• 1:21:02
  SPEAKER_00: This was bad for the Spanish economy and bad for the Spanish society.
• 1:21:06
  SPEAKER_00: Why was it why was it bad?
• 1:21:08
  SPEAKER_00: Two reasons.
• 1:21:09
  SPEAKER_00: It meant the Spanish crown didn't much have to negotiate with anybody, and didn't much had none of the locals and didn't much have to pay any attention to the needs of local commerce because it wasn't all that important to its revenue base.
• 1:21:22
  SPEAKER_00: And you had all this silver flooding to Spain, and silver is the main monetary metal, which means Spanish manufacturers were expensive.
• 1:21:30
  SPEAKER_00: They were silver deer, because that's where the silver hit.
• 1:21:33
  SPEAKER_00: Europe first.
• 1:21:35
  SPEAKER_00: So it undermined their ability to export, and you had a had a state that didn't really care much about local commerce because, well, you know, silver claims from America.
• 1:21:44
  SPEAKER_00: We just dig it up.
• 1:21:45
  SPEAKER_00: We're rich, it's fine.
• 1:21:47
  SPEAKER_00: Um, so you can see that the you know the empire was great for the Spanish crown, but it was not good for Spanish society, and it was certainly not so good for the Spanish economy.
• 1:21:57
  SPEAKER_00: Um and you go to Britain, okay, you look at Britain, by 1913 they're running about a quarter of the planet.
• 1:22:04
  SPEAKER_00: It's very impressive.
• 1:22:05
  SPEAKER_00: And then you look at okay, how much money did Britain actually make from its empire?
• 1:22:11
  SPEAKER_00: And you look and you think you discover it's about 5% of GDP, which is not a lot for running a quarter of the planet.
• 1:22:19
  SPEAKER_00: What that meant, of course, was over 90% of the British economy had nothing to do with the empire.
• 1:22:28
  SPEAKER_00: And when you look at these vast European empires, were they conquered by main armies?
• 1:22:33
  SPEAKER_00: No.
• 1:22:34
  SPEAKER_00: They were conquered by small expeditionary forces.
• 1:22:37
  SPEAKER_00: Why?
• 1:22:38
  SPEAKER_00: Because the way that European civilization had developed and the intense competition between the European states meant that they had really, really, really capable states and really, really capable institutions, so they could literally conquer a place with small expeditionary forces.
• 1:22:57
  SPEAKER_00: You know, uh Cortez takes over Mexico with a few hundred men.
• 1:23:02
  SPEAKER_00: Now, why did he do that?
• 1:23:04
  SPEAKER_00: Well, two reasons.
• 1:23:05
  SPEAKER_00: One is disease.
• 1:23:08
  SPEAKER_00: You export the entire Eurasian disease package to the Americas, and people die in horrifying numbers.
• 1:23:16
  SPEAKER_00: And the other reason is the Aztecs were trying to run an urban civilization with no domesticated herbivores.
• 1:23:23
  SPEAKER_00: And what do you do when you do that?
• 1:23:24
  SPEAKER_00: You sacrifice people and eat them.
• 1:23:26
  SPEAKER_00: That's what you do.
• 1:23:27
  SPEAKER_00: Uh, because you don't have any good other good meat sauce, really.
• 1:23:32
  SPEAKER_00: Um, and of course, that meant that there are locals who hated them because they would go to war with them, capture their people, and eat them.
• 1:23:40
  SPEAKER_00: So if you're the Spanish, you'd stand up and say, Yeah, you hate these guys.
• 1:23:43
  SPEAKER_00: Next join them, nice joy, you know.
• 1:23:45
  SPEAKER_00: And Cortez had an army that was much bigger than a few hundred Spaniards because there were always locals who went, yeah, we want to kill them.
• 1:23:53
  SPEAKER_00: And it's a sort of log rolling.
• 1:23:54
  SPEAKER_00: And the same thing happened in the Inca Empire.
• 1:23:57
  SPEAKER_00: Pensarro never had very many troops, but he said to the locals, look, join Christianity, and our rule is one but one man, one wife.
• 1:24:06
  SPEAKER_00: And there's all these local men who couldn't get married because the Inca controlled the women, basically.
• 1:24:12
  SPEAKER_00: And they basically said, You mean if you're joining you, we get to get married?
• 1:24:15
  SPEAKER_00: And Pensaro said, Yes.
• 1:24:17
  SPEAKER_00: And they go, Christian, where do we sign up?
• 1:24:20
  SPEAKER_00: Um, okay, so they they yeah, I mean in fact, this is a habit.
• 1:24:24
  SPEAKER_00: The Spanish Empire did the same in the Philippines.
• 1:24:25
  SPEAKER_00: They basically rolled-rolled around the archipelago, getting everybody to agree not to be pirates against each other.
• 1:24:30
  SPEAKER_00: Um, so you get these vast areas that are conquered by remarkably small feat small um expeditionary forces because they were brave.
• 1:24:40
  SPEAKER_00: Whatever else about them, they were brave.
• 1:24:42
  SPEAKER_00: They had much better military technology, and they had all this experience about how do you manipulate the locals to get them to do what you want, because the locals hate each other.
• 1:24:52
  SPEAKER_00: Um, or else, in the case of the Philippines, if somebody could just come in, they could all agree not to pirate each other, right?
• 1:24:59
  SPEAKER_00: Which is, you know, it's an architect, people pirated each other all the time.
• 1:25:03
  SPEAKER_00: The Spanish log rolled round saying, let's all agree not to pirate each other, and we'll protect you against pirates.
• 1:25:08
  SPEAKER_00: And basically, everyone said, yes, let's do that.
• 1:25:11
  SPEAKER_00: Um so, yes.
• 1:25:14
  SPEAKER_00: So it's the organizational capacity and the uh intense competition, right?
• 1:25:20
  SPEAKER_00: So um Francis Bacon points out in about 1604 that the compass, gunpowder, um, and the pretty grass were transferring the world.
• 1:25:31
  SPEAKER_00: They were in European hands.
• 1:25:34
  SPEAKER_00: They were all invented by the Chinese first.
• 1:25:36
  SPEAKER_00: What do they do in China?
• 1:25:38
  SPEAKER_00: Not a lot, really.
• 1:25:39
  SPEAKER_00: They didn't even transfer to China for that much.
• 1:25:41
  SPEAKER_00: You put them in European hands where you've got a different institutional structure, a different highly competitive state structure, where they're all desperately competing in each other because they're all fighting each other all the time.
• 1:25:52
  SPEAKER_00: You end up with really effective states who are really good at generating wealth and tax revenue, um, and so are very effective.
• 1:26:05
  SPEAKER_00: Rich states mainly trade with each other.
• 1:26:08
  SPEAKER_00: The overwhelming majority of rich states trade with each other.
• 1:26:12
  SPEAKER_00: So 1913, a core of the planet, 5% of BS GDP, but they've got to pay to administer a core of the planet, and they've got to pay for a Royal Navy, which has to be big enough to beat any two other navies and basically control the entire planet.
• 1:26:32
  SPEAKER_00: That's expensive.
• 1:26:33
  SPEAKER_00: That's really expensive.
• 1:26:34
  SPEAKER_00: So by the time you've paid for all that, the empire is optimistically a wash.
• 1:26:40
  SPEAKER_00: So when the Britain, for whatever reason, partly gives up, partly gets pushed out of its empire, does Britain become poorer?
• 1:26:48
  SPEAKER_00: No.
• 1:26:49
  SPEAKER_00: Britain becomes richer.
• 1:26:50
  SPEAKER_00: All the Imperial metropoles become richer.
• 1:26:53
  SPEAKER_00: Why?
• 1:26:54
  SPEAKER_00: Because getting access to the American market and getting access to the maritime order the Americans impose through their alliance system and their US Navy is much more valuable and a lot cheaper than running an empire.
• 1:27:08
  SPEAKER_00: So if you're in Japan, you get your empire stripped from you, you get bomb flat, but you had the culture and the institutions that work, you can rebuild yourself, and it turns out being part of the American Maritime Order, much more valuable than having your old empire.
• 1:27:26
  SPEAKER_00: And everyone found that.
• 1:28:00
  SPEAKER_00: Clearly resent the American dominance, but on the other hand, they're massive beneficiaries from it.
• 1:28:07
  SPEAKER_00: Um there's a bit of a segue, but it goes back to what actually makes you rich.
• 1:28:12
  SPEAKER_00: What makes you rich is trading with rich people and having the institutions to produce the stuff and to add to your productive capacity, it's not living off the resources of the rest of the world.
• 1:28:27
  SPEAKER_01: Um well that's I think Lorenzo, the big takeaway here is number one, people can either read uh John John Rapley and Peter Heather's book, uh two, they could read Edward Gibbons' Fall of the Roman Empire, or three, I think they could listen to this if they want to bypass all of that and get a good analysis of really what's gone on without having to either read a very short book that goes on tangents and modern or Gibbons many volumes.
• 1:29:00
  SPEAKER_01: Beautifully written many volumes.
• 1:29:04
  SPEAKER_01: Yes, a beautiful beautifully written, many volumes for the YouTube culture.
• 1:29:09
  SPEAKER_01: This will suffice.
• 1:29:11
  SPEAKER_01: Uh I will include the links in the show notes for all of the articles that we've talked about today, Lorenzo.
• 1:29:18
  SPEAKER_01: I suggest anyone who has access to Substat should go and subscribe to Lorenzo.
• 1:29:24
  SPEAKER_01: Uh it's currently free, but you should you should pay him for what he does.
• 1:29:28
  SPEAKER_01: It is very, very good and he leaves receipts, lots of references.
• 1:29:32
  SPEAKER_01: Lorenzo, it's been an absolute pleasure to have you on again and uh look forward to the next time.
• 1:29:38
  SPEAKER_01: Thank you.
• 1:29:38
  SPEAKER_01: It was being great.
• 1:29:39
  SPEAKER_01: Thank you very much, John.
• 1:29:45
  SPEAKER_01: To keep up to date with all that I am doing, please subscribe to the Thinking Class YouTube channel at Thinking Class and follow me on X at Thinking Classes.
• 1:29:55
  SPEAKER_01: Thinking Class seeks to understand the civilizational issues we face and why what our leaders do in response matters.
• 1:30:01
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• 1:30:11
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• 1:30:20
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