Bryan Caplan: Why Housing Costs DOUBLED

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Monetary Metals
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Best-selling author and economist Bryan Caplan joins the podcast to discuss why housing prices continue to rise, what we can do about it, and why everyone seems to hate markets.

Follow Bryan on Twitter @Bryan_Caplan

Connect with Monetary Metals on Twitter: @Monetary_Metals

Additional Resources

Books by Bryan Caplan

Bryan Caplan’s Substack: Bet on It

Earn Passive Income in Gold

Gold Bonds to Avert Financial Armageddon

Arthur Jensen Book

Podcast Chapters

00:00:00 – Bryan Caplan

00:00:17 – Monetary Metals

00:00:43 – Build, Baby, Build!

00:01:23 – Housing deregulation

00:04:00 – Common objections

00:09:03 – Why people hate developers

00:17:36 – Investing in real estate

00:31:00 – The fiscal impact of open borders

00:38:58 – The Ideological Turing Test

00:46:41 – Are IQ tests biased?

00:49:40 – AI companions and loneliness

00:52:09 – Moving back to the gold standard

00:56:36 – Javier Milei and Argentina

00:59:30 – Soviet Spies

01:01:28 – Why we hate rich people

01:03:48 – Where to get more Bryan Caplan

01:04:29 – Earn passive income in gold

Transcript

Ben Nadelstein:

Welcome back to the Gold Exchange podcast. My name is Benjamin Nadelstein from Monetary Metals. I am joined by New York Times best-selling author and George Mason economics professor, Bryan Caplan. Bryan, how are you doing?

Bryan Caplan:

Doing fantastic, buddy.

Ben Nadelstein:

Bryan, you have put out a new book called Build Baby, Build: The Science and Ethics of Housing Regulation. This is a non-fiction graphic novel, which means it combines words and pictures to make academic research on housing. Actually, a fun edge-of-your-seat experience. I’ve read the book. It is incredible. I urge you to read it as well. Bryan, can you give us a main overview for the argument for housing deregulation? Most people think, Oh, my God, if they start deregulating housing, people are going to build a pink 10-story building next to me. They’re going to destroy the nature. My favorite worm is going to be killed. What do you say to people who think housing deregulation, you’re crazy?

Bryan Caplan:

Well, a good way to start is say there’s been a very large rise in the price of housing over the last 40 years, a lot more than inflation. It’s not just inflation. Housing is rising more than inflation. It’s risen a lot more in some places than others. Infamously in the Bay Area, it’s gotten really crazy. Then the question is why. There’s a usual story about how competitive markets work, which is if demand goes up, price goes up. But in the long run, when price goes up, price is above average cost, which basically is an announcement to the entire business community, make more of this thing because it It’s like a license to print money. As a result, in the long run, you get entry, prices go back down to average cost. This is the way markets normally work. It’s the way housing markets used to work. About 40 or 50 years ago, it seems like they stopped working this way. Why? Well, there’s some very smart people who looked into it, and almost everybody, regardless of their political views, comes away and says, It’s government. It’s government that did it. Government prevents the construction of EU housing.

It doesn’t matter how valuable the housing is compared to the cost making it. It’s so hard to get the permission that we have this permanent situation of prices well above cost. If you actually try to measure how much, it looks like averaging over the US, we’re talking roughly housing prices are at double the cost of production. A lot more in some places, like San Francisco, it might be 10 times the cost of production, physical cost. On the other hand, in some rural areas, may be very little effect at all. But essentially, we have roughly doubled the price of the second most fundamental necessity of life. Food is the more important, but after food, it’s shelter. We’ve doubled the cost of that. Deregulation is a totally realistic, pragmatic way to get prices back down to Earth.

Ben Nadelstein:

Brian, why don’t I start with some common objections? You probably hear all the time. The book does a great job actually showing, not even just telling, but showing you why maybe some of these objections are at least overblown, right? Everyone can say, Okay, yeah, maybe a bird’s nest is going to get trampled. But a $4 billion housing project, that’s $4 billion worth of value. So let me start with some objections. So you hear this one all the time. Okay, well, I’m living in, let’s say, California, and I have a really nice neighborhood. There’s all these families who live here. There’s people walking by. And if you just build a huge apartment complex, why? That would junk up the sewer system. There’d be people everywhere. The traffic would be crazy. I mean, you really want a huge apartment condo next to my little family unit?

Bryan Caplan:

Of course, they got to buy it. That’s important. They don’t just buy one house. If you’re building a giant apartment, you buy a bunch of houses. If you just think of it from the point of view of the complainer, it’s like, well, you might get to be one of these people gets bought out for a fabulous amount of money. If you say, oh, I don’t care about money. Yeah, that’s easy to say, but action speaks a lot of the words. When people get offers like that, they generally do take them because there’s a lot of places that you could live. And do you really have to be actually there when you’re getting a fantastic offer to be someplace else. The main issue is that all change bothers somebody. But markets are a great way to say, let’s put some money on it and see how much you really want to keep things the same and how much are people willing to pay to change it. There’s always, of course, some complaints. The most fundamental point is, look, there’s a bunch of complaints, and most of the complaints, there’s something to them. But there’s also a bunch of good things that happen that almost nobody mentions.

How about all the families that now get to live in that neighborhood and they’ll enjoy it? How about them? Barely ever get brought up. Or if you say, Oh, I don’t like the traffic. How about having some friends for your kids within walking distance? That’s another realistic possibility. Now, you may say, Well, okay, but who’s to say which one is bigger? Even to have that objection is saying, Yeah, well, then you probably shouldn’t be getting so upset. If it’s just a toss up or you don’t know then why are you going and getting angry or going to meetings or putting up protest signs. But more importantly, we actually do have a strong set of evidence that in general, the good outweighs the bad. What’s the evidence? Well, like I said, actions speak a lot of the words. It is totally standard for people who live in high density areas with lots of people to complain. And yet it is a simple fact that there is a place out in the middle of nowhere where all their complaints are no longer true. There are plenty of places in America who live with no traffic, no parking, no noise, but also no restaurants, very few job opportunities, very few friend opportunities, very few cultural opportunities.

What we see is that most people are very glad to pay a lot of extra money to get the package of good plus bad, to get all the bad stuff that people bring, plus all the good stuff, and people pay a big upcharge for that, which shows that people generally actually like the effects of density despite all of the complaining.

Ben Nadelstein:

Bryan, I find that an interesting point, which is, hey, listen, on net, it might be unclear. Are cities and lots of housing and deregulation a good idea or a bad idea? And we should be much closer to single family zoning and all these things in the question. In some ways, the answer is itself. Look at the coolest places on the planet. There are Texas, Austin, Singapore, Hong Kong. No one’s like, Oh, my goodness, there’s so much housing in Hong Kong. It’s great. That’s why people like Hong Kong. In the book, you even mentioned the Amalfi Coast, right? Oh, we should have it completely untouched, just sand and water. But actually, what makes the Amalfi Coast so interesting and what a beautiful place is the actual human element is the building element.

Bryan Caplan:

Yeah, it’s the blending. It’s developing a beautiful area and making it better, which is what a developer wants to do. Just the very word, a developer wants to develop things. They want to go and take something that’s pretty good and make it better so that they can make a pile of money.

Ben Nadelstein:

It seems the problem there is the pile of money at the end, right? Everyone likes software developers. I mean, they make money, too. But it feels like the The pile of money portion is the part that people generally don’t like. It feels like, hey, landlords are generally hated compared to software developers. Why do you think that is?

Bryan Caplan:

That’s a great question. It is quite odd because we don’t have many movies about how farmers are evil or even Iagro business is not considered very evil. But my friend Michael Manville, just down the road from UCLA, did this very cool paper where he actually asked people about, Would you approve this housing project? Everybody got the same hypothetical with one variation. In one version, they mentioned that developer would make a lot of money, and the other one, they didn’t. Just mentioning the developer would make a lot of money crashes support by 30 percentage points. There is some strange antipathy towards people that supply housing. Now, as to why that is, I don’t have any really good story about that. There is a general distaste for business and the rich, but as to why this particular business gets so much ire, it’s hard really to fathom what it is about it. There is the idea of, Well, I live here and you are intruding on my way of life. Well, you could say the same about a lot of other businesses, too. You go and you broadcast some TV shows that I don’t like, and then my kids are watching something that bothers me.

Perhaps there is some very primitive sense of the land is my home and this is sacred, which would make sense coming back from prehistoric times. That’s the best I got. I I can’t prove that or anything, but maybe.

Ben Nadelstein:

Brian, we have a lot of people who listen to the show that are investors of one kind or another. Some are real estate investors, obviously lots of gold investors and precious metals as well. When someone is saying, Hey, I’m a developer, or, Hey, I’m a landlord, maybe you can tell them about why you think housing is the panacea policy and put some ammo in their belt. Because most people, they say, Oh, you’re a developer, or, Oh, my goodness, you’re a landlord, and they really have no good response. So what is the panacea policy? Give us in our belts for investors.

Bryan Caplan:

I mean, I would just start with the, Oh, I’m a terrible person because I provide the second most fundamental necessity. It’s like, Without people like me, you would be unhoused. People like me build stuff. Why am I the bad guy? I do something totally useful that you enjoy every day. I can’t even imagine what the complaint is on some fundamental level. Why would I be the villain? But on top of that, yes, a lot of what motivated me to do the book was not just the research saying that government is strangling housing supply and has drastically raised the price. You can combine that with the fact that this is a large share of people’s budget, so it’s doubling the price of something that’s really important. But what really motivated me to do the book is to realize there’s a lot of other policies, a lot of other problems, rather, that seem not really related to housing, that actually are closely related to housing. That’s why I do call it the panacea policy, not literally a panacea. It won’t cure every possible problem. It won’t cure cancer. But nevertheless, there’s a lot of problems that people complain about and feel pretty hopeless about.

I say that not only are there solutions, but there’s one solution for all of them at once, and that is deregulating housing. To start with some really simple ones, inequality. Turns out that a large reason why inequality has increased is just that people who were lucky and bought homes in desirable areas when they were cheap 30 or 40 years ago are now worth $10 million. The people whose parents didn’t buy in those areas don’t get any piece of that, and they’re doing a lot worse. The rise in capital share that you might have heard about, made famous by French economist Thomas-Peketty, turns out when you really separate the numbers, it’s just housing that’s rising in its share. What we think of as capital includes housing just casually without really thinking about it. If you split out housing and other capital that we think that’s more stereotypical, the stereotypical factory-type capital, that is not gained in its share. It’s just housing. It’s not this inextirpable, It’s not the playing out of the logic of capitalism, but rather it is the playing out of the ill logic of government strangling this fundamental industry. Social mobility, another good example.

There used to be a nearly foolproof way for someone to get up for mobility in America, and that’s pack up your car and move to a high-wage part of the country. Because historically, the cost of living did not vary that much by area of the country, but wages did. All you need to do is move to the high-wage place and you’ve got yourself a better standard of living. Now, there’s still high wage parts of the country, but unfortunately, they generally have much higher housing costs, so high, in fact, that normally low income workers, low skilled workers lose money by moving to the high income areas. As Mississippi janitor gets poorer, not richer, when he moves to the Bay Area. I talk about fertility. One of the really big things going on with fertility is when housing prices are high, people keep living with their parents. When you keep living with the parents, you don’t get married, very likely, and you’re especially unlikely to have kids. So do you really get housing? People are going to move out sooner, and this will probably speed up family formation and number of kids that people have. There’s, of course, environmental complaints Since you’re in California, you know how aggravating Californians are.

I’m from California, too. It’s like, You don’t know what you think. You know Californians, you are not in possession of a superior enlightenment. You just aren’t. Standard thing in California is passing laws to protect the planet in California. What’s the result of that? Well, the result is that people leave California, which has a very nice climate, which means that people living there don’t spend much on heating or cooling. Then where do they go? They go to other parts of the country where they will have higher heating and cooling costs. The planet needs to be saved in California. It’s a weird idea. If Californians really wanted to do stuff for the planet, they It would make it really easy to build to get the population of California up to a massive level because living in California has a smaller carbon footprint, most obviously. There’s that. Another big one. There’s been a lot of talk in recent decades of the plight of the non- College male in America. We’ve got declining income, we’ve got falling life expectancy, high rates of alcohol and substance abuse and suicide. All this stuff, the standard story from Nobel Prize winner Angus Deaton and my dissertation adviser and case, is that non- College males haven’t adapted well to technological change.

There’s been a big decline in traditional manly employment. They’re not going to learn to code, and they don’t like service sector jobs. This often leads people to say, Well, then we need to go and cut off foreign trade in order to provide traditional manufacturing to save these poor non- College males. I have a piece where I just go over the math and say, Even if you just cut off all foreign trade, it really wouldn’t make There’s that much difference. Most of the reason why manufacturing employment has fallen is just rising productivity per worker. We’re getting so good at making this stuff. We don’t need many workers to do our manufacturing. On the other hand, if we were to deregulate housing, That is overwhelmingly done by non- College males, the technological progress has not been that great. And so not only would this mean that non- College males could afford to get their own nice houses, but they would be employed in building them. And this is a huge sector. We’re We’re talking about 10 million workers. If we were to double it, that is making a huge dent in this problem of what gets called death’s the despair.

Ben Nadelstein:

So again- The policy really is a panacea. You also mentioned crime as well. Hey, if there’s an unlit area and there’s a parking lot there and kids are doing drugs….

Bryan Caplan:

Especially vacant lots. Here there’s a very cool experiment in Philadelphia where the authors begin with just some facts. 15% of urban land in the US is vacant. It’s like, What? Why is it vacant? All right, there’s this story. Well, I’m speculating in case it goes up even more. But a lot of the vacancy is just caused by, I can’t get the permission to go and build anything or at least to build what I want. I’m just going to sit around and hope my brother-in-law gets elected to the housing commission or something like that. All right, so anyway, the authors of this one paper, The Proceedings of National Academy of Sciences, said, Hey, what if we get permission just to go and beautify these vacant lots, which are normally dense of crime? If you’re going to go and have a gang hang out, a vacant lot is a perfect place for it. So let’s go and do an experiment. We’ll rebutify a random half. This is a key thing if you were a social science nerd. If you do all, then it’s hard to know what happened. But if you do a random half, then it is like testing a drug where You see, well, the people that randomly were given the drug did better or worse, and so we can find out how well the drug really works.

What they did is they randomly took half the vacant lots in Philadelphia. They cleaned with the trash, plenty of grass, plenty of trees, benches, little picket fence, Then they saw what happened to crime, and it really did actually reduce crime. What’s interesting about this piece is if you read through it to the end, there’s a section where they say, We’re not talking about gentrification. God knows we would never want to let anybody build anything. We just want to plant grass. Don’t be mad at us. I’m reading this as like, How about we go and put buildings there? If planting grass makes the criminals not want to be there, how about putting a nice apartment complex that will probably really reduce the crime there? I’m thinking it’s all based upon this strange bigotry against real estate development and the refusal to accept the basic economics of when you make housing abundant, you make it cheap.

Ben Nadelstein:

Brian, I want to cut in here. For some investors that are listening to this, they’re saying, Okay, well, if I had an option to go into a different, maybe I was going to be a real estate trader or a stock trader. It sounds like real estate is highly regulated. But on the other hand, it feels like real estate prices just have to keep going up. If there’s low supply and lots of demand because our population keeps growing, isn’t it a great time buy real estate as an asset or real estate investment trusts? Because over time, the price of housing just has to go up.

Bryan Caplan:

It depends on to what extent you think that’s already reflected in current market prices. If you’re the first person on Earth to figure this out, then you’re in for making a pile of money. If you are the millionth person who’s figured this out, then you’re not going to make any money off of this. The only reason to say maybe there still is this opportunity is just that It is actually pretty hard to go and buy houses and then keep them off the market in pristine condition. If you just thought that the price of, say, I don’t know, this microphone was going to go up a lot, then you might actually just buy a million units, put it in a warehouse for a very low cost per microphone. It stays wrapped in plastic. As long as the rain doesn’t get in, it’s going to be perfectly fine. Housing does not work that way. If you were to go and just buy it and sit on it, you would have to be worrying about squatters and stuff like that as well as maintenance. If you had some good way of handling that problem, this is why, for example, if your brother is happy to go and rent from you and you give him a little bit off the rent and then you trust him a lot, so you’re in that favorable situation, then this probably is pretty sensible.

There actually was a house in my neighborhood after the Great Recession that was just empty for 10 years. I was sorely tempted to go and buy it and just take advantage of the fact I live on the street, so I’ll know if any squatters are there. But my parents actually put most of their investments into real estate. While they did well in the end, it was so hard on them to go and handle rental properties. So I never want to do that myself.

Ben Nadelstein:

Well, Brian, we wrote a book for real estate investors. It’s talking about how to earn passive income in gold and why that helps real estate investors. And two of the points that you mentioned are relevant. One is that obviously housing has a large cost to it, whether that be time, you got to go deal with renters or squatters, God forbid. And it’s a very difficult asset to store, and it’s not exactly fungible. So if you have a house in Arizona, that’s not the exact same thing as a gold bar in Arizona or a gold bar in New York. You can send gold around quite quickly. And the storage costs for gold can be quite small. $10 million with a gold, you could probably fit in a couple of suitcases, versus $10 million house. That’s quite a big house. Interesting asset discussion there. I want to pivot because- I feel a heist movie coming on here. Well, I hope not.

Bryan Caplan:

It’s all insured, right?

Ben Nadelstein:

It is all insured. It is all insured. Yes. Wow, Well, one thing for real estate people to think about is that it is quite simple to insure your home because most people don’t want to burn down their own house. And you can also tell with some investigative techniques, whether this house was burned down with malice, if there was an accident, and how much damages are owed, versus gold can be quite difficult. And that’s why it’s very difficult to ensure gold at home, because most people can say, Hey, I lost it, or someone stole it. And it’s quite difficult to say, Oh, yes, this was clearly a case of theft or if the owner themselves lost the gold. So it is quite difficult to ensure gold at home. I wouldn’t say impossible. It’s technically partially possible, but quite difficult. So that’s why some people opt to store their gold professionally, which has costs. Other people, of course, use We covered the insurance. We also pay passive income in gold. Let’s change quickly here. So you wrote this book. It’s a non-fiction graphic novel. Most people think, Oh, you’re a boring old professor. It’s going to be some boring old housing book.

That is absolutely not the case. You said you wanted to write the book because you wanted to fight esthetics with esthetics. Can you tell us a bit about that? Are all your upcoming works going to be graphic novels? Do you find that that’s really a better way to get this information out there?

Bryan Caplan:

Not all, But I’m definitely going to keep one foot in the graphic novel field because they are so much fun to write, and it’s just such an amazing intellectual experience to get to do it. The story here is, I am an economist, I think in terms of numbers, weighing dollars. But when you actually talk about housing in particular, it’s obvious for a lot of people, it’s not about numbers at all, it’s just about esthetics. I find that beautiful. I don’t want to talk about the cost or what the value is. I just want to go and look at pretty stuff, and I don’t touched. So one thing is just to say, Well, you’re crazy. I can’t deal with people like you. And then you write that person off as someone you might persuade. What I wanted to do in this book is to say, All right, look, how do you know it would be ugly? What makes you so sure that development would be bad. It hasn’t happened yet. You didn’t get to look at it. You never got to compare what you see right now that you like with an alternative. You’ve done that testing when you go to the optician where it’s like, Is it better like A or better like B?

A or B, If you don’t get to see both options, then you aren’t really in a position to make an informed esthetic judgment. What I wanted to do in this book is to actually draw the alternatives. Say, All right, here’s the world that you see, which you are so concerned to protect on esthetic grounds. Here is an alternate world that doesn’t really exist, but I’m showing it to you through the power of graphic novels. Then how about now? Now, when you go and compare the two, one of my favorite pages involves one shot of the actual, undeveloped California coastline, another one of the very same coastline, except it’s got a whole lot of nice housing on it. I at least, say, and I think most people who just look the pictures without an Ryan will say, I like the picture with development better, which makes sense because the most treasured Coast lines in the world are, like you were mentioning, the Amalfi Coast, places like that where there’s people that start with natural beauty and then they augment it with human habitation to generate something that is a beloved tourist destination for all of humanity.

That’s what I’m going with. Same thing with you want to tear down some historic buildings. That’s terrible. These are beautiful buildings. Often, they are beautiful. But why do you think what we’re going to build instead will be ugly? Maybe we’re going to build something gorgeous. How do you know? What makes you so sure that the worst will happen? Honestly, I think this is a lot of the basis for support for housing regulation. It’s just leaping to the most negative negative, paranoid conclusion and treating it as fact rather than say, How about we judge the future by the past? How often was it the case in the past that when historic stuff was torn down, it really was replaced by something worse? In the book, I actually have a time machine because it’s fiction, and so I can do that. Well, that part is fiction. Anyway, I go and show the original Waldorf Astorio Tell, which is a gorgeous building that was torn down in 1929 to make room for the Empire State Building, which I trust almost everyone will say is way better. That’s the thing that I’m going for, fighting esthetics with esthetics.

Ben Nadelstein:

One part in the book, you mentioned, Hey, the Eiffel Tower, when that was first built, people were like, Oh, it’s an eyesore. Why did we build this thing? Now that is one of the most incredible pieces of architecture in the world. If we had followed the anti-Brien Kaplan people who just complain about everything, we wouldn’t have the Eiffel Tower.

Bryan Caplan:

Honestly, so many people say, You can’t touch Paris. It’s like, It could be improved. It could totally be improved. I’ll say my big esthetic objection to Paris is there’s not enough variation in color. When you look at that view from the Eiffel Tower, Oh, it’s so gorgeous. A bunch of six-story buildings, all the same color, pretty much. It’s boring. We could do way better than that. Also worth pointing out, even the regulation they have has not stopped the monstrosities like the Pompidou Center. So If you like that, I’m like, All right, then we’re never going to agree on esthetics. But yeah, we’ll bulldoze that thing, put up a skyscraper that’s awesome.

Ben Nadelstein:

Brian, I had a theoretical question for you. A lot of times people talk about something called a public good, which I’ll have you explain what that is. And they say, There’s really no way to solve this. Yeah, we got to get the government in here. We got to solve this public good problem. A lot of ways, it feels like housing could actually be solved with a similar solution that people have found of public goods, which is you buy the entire thing or you have options on the entire property or whatever the problem may be. And then since you own it, you have an incentive to make it better. So someone would say, how are we going to defend this whole city? Because there’s a problem here, right? If I pay protection, they’re not going to use the anti-ballistic missiles on just my house. That’s not how ballistic missiles work, right? So how can we protect this whole city? That seems like a big public good problem. Let’s get the government in here. They’ll protect this entire swath of land. But you do the same thing. You have an option contract on every single house in the neighborhood, and then you have an interest in making sure those houses have defense, which should increase their value, so on and so forth.

How do you see options contracts, figuring out things that people used to say, Okay, this is impossible. And is there an opportunity for investors to do something like a self-styled city where they say, I’m going to buy a lot of land here. I’m going to make it my own. We’re going to get rid of all these housing regulations and maybe make some money that way.

Bryan Caplan:

I was just at Enduras where my friends at Prospera, the charter city, are totally into this stuff. It’s a really intuitive idea, the entrepreneurial community. There’s one like landowner who owns it all, and then they basically go and have contracts with everybody there. They’re able to go and purchase an enormous quantity of land. You’re able to actually have a bunch of things. It was like, Well, this would affect that. This would affect the other thing. It would affect it positively, it would affect it negatively. Let’s factor all this in. Very reasonable idea. It’s the principle of every shopping mall. What’s striking is that government very strictly regulates this stuff, too. If you’re a real estate developer with a very large plot of land, the local government will generally come in and say, You’ve got to give every house a minimum amount of land, and often the minimum is a pile of land, like an acre. This is a case where the most logical thing would precisely be to say, You have factored everything into your decision already. It’s such a large a lot. All the effects of every neighbor and every other neighbor are part of your profit maximizing calculus, so you do whatever you want.

But of course, they’re not allowed to do whatever they want. Same thing goes for commercial developers. You want to do a mall, you might think this they have every incentive to consider all the effects. And yet there is very strict regulation of how much space they have to allocate to parking. And the rule is insane. Standard US parking law for commercial developments is you have to have enough parking spaces so that there is a space for every single customer on the busiest day of the year, Black Friday, if you charge zero for parking. The result is that we have enormous parking lots which are almost always empty almost all the time. The alternative would be the free market approach where you can build as much parking as you want. If you charge too much for parking or it’s inconvenient, then people won’t want to go to your mall, and it’s your choice of best to how you want to handle it. Right now, in terms of entrepreneurial opportunities, they are there. I don’t think that I have any special knowledge of how to do it because the thing is, you have to navigate government regulation to do this thing, too, and it’s often pretty strict.

The main place where you are most free to build is in the middle of nowhere. Unfortunately, you’ve got to figure out why anyone to live in the middle of nowhere, and sometimes they do. Sometimes you can temp them into it, and that’s how every new community gets started. But if you know that, you don’t need advice from me. Then you’ve got a superpower already. I neglected to put this into the book, but totally worth pointing out that the federal government, especially, but also state governments, own a crazy amount of land in the United States. This is all under the influence of the ideology of conservationism. It’s nothing to do with government owns the land people don’t want. You can just look at a map and see that areas that became part of the US before the rise of Teddy Roosevelt and John Muir, almost all privately owned. Rest of the country, largely owned by government. But anyway, one striking thing about this is if we could get this government land privatized, this would give an ideal opportunity for, say, Elon Musk to buy 100 square miles and then do an extreme version of this. He probably does have the superpower that he could get people to move to a totally undeveloped area because it would be Elon town.

He would probably just start by putting headquarters there. So he’s got his workers and then put a bunch of other cool stuff there. And then word gets out and he’s got free advertising by virtue of his same. So he’s a natural candidate for doing this if we could actually privatize a pile of government land, which is like bull and teeth, unfortunately.

Ben Nadelstein:

Well, I will happily move to Elon Town. If you move, Brian, it sounds like a interesting thing. Okay, so next question here. So So we’ve talked a bit about housing. We’ve talked a bit about, Hey, there’s all these different problems where the government regulation stops this, as well as the voters who have an esthetic displeasure with lots of things that if you really looked at it more neutrally or on net, you would say, okay, maybe this is not a big deal. You’ve written tons of other books, Brian. The other graphic novel you wrote was about open borders. I’ll be your regular citizen. Most people hear open borders. Nobody believes that. That’s crazy. Open borders.

Bryan Caplan:

And also, it’s what we’ve had for the last four years, right? Yes. First, no one believes it. Second, it’s what we’ve had.

Ben Nadelstein:

Yes. Nancy Pelosi and Joe Biden love open borders is the claim, and also, nobody believes it. Okay, question. I’ll start with some of the basic objections against. And by the way, go buy this book. It’s the coolest thing. You can read it for your kids, you can give it to grandma, and you can give it to a research student who’s doing economics. These are all great books for all levels. I highly recommend. So let’s start. Most people here, Brian, you support open borders. That sounds crazy. What happens when an illegal immigrant from, let’s say, Mexico, crosses the border? Then they have kids here. That means they’re going to get free schooling and free health care. And if they break their knee, America pays for it. So how could they be a net positive. This seems crazy. You want more of this?

Bryan Caplan:

First thing, the fiscal effects is something where people have very strong opinions about it, but it’s math. Having strong opinions about math does not make a lot of sense. I’ve never successfully solved a math problem by getting angry about it or hopeful about it. You solve math problems by just calming down and doing the numbers very carefully. Almost no one with an opinion about the fiscal effects of immigration has even looked at the numbers. It’s just fact. Instead, how do people get their opinions? They use a philosophy. If you don’t like immigration, then you say, Oh, fiscal effect of immigration is terrible. If you like immigration, fiscal effect is great. These are both totally corrupt ways to form opinions about this question, what is a non-corrupt way? Actually go and read the numbers. Now, well, there’s a lot of different numbers. Well, what I would say is put aside numbers from advocacy groups. They’re highly biased. Try to find people who are just boring quants with no dog in the fight, just doing math, such as National Academy of Sciences. This is the main source that I relied upon for Open Borders, where they go through it.

Now, here’s the thing. This is actually very complicated. Why? Well, on the one hand, you can say, Look, we’ve got a progressive tax system. So if you have investors that are listening, they know about progressive taxes, I assume. All right, so we got a progressive tax system. So all else equal, this is a reason to think That high earning immigrants would be a net benefit for taxpayers, low earning immigrants would be a net burden. Then you’re like, All right, fine. That’s the reason to least be concerned about having low skin immigration. But there’s a few other things to consider. One of them is that a lot of government spending is on goods that are called non-rival by economists. This means their cost doesn’t vary by population. Some, of course, does. Schooling is a classic one where more students means more cost. On the other hand, regardless of your opinions on national defense, if we had a baby boom, this would not be a good reason to go and change the number of nuclear weapons we have. You can defend 50 million new babies just as easily with what we got as without those babies. This is a large share of government spending.

When you go and do that, then it’s like, All right, well, that makes that math more favorable. A good way of thinking about it is this. You go to the movie theater in the middle of the day, there’s almost nobody there, even though they’re charging them well below the full price of a ticket. Does that mean that they are losing money on those tickets? The answer, of course, is no, because it’s close to non-rival to let people in for a matinée. So you get any money out of them, it is actually going and giving you some extra There’s a bit of air conditioning, things like that. But still, that gives you an idea that it is possible to have customers that pay way less than average and are still good customers to have. That’s the same logic for non-rival goods for the effect of immigration on the budget. Now, another key thing is that immigrants have a big advantage. You mentioned schooling. It’s true that immigrants do have kids. If you are being tricky, you will say, Well, the immigrant is an adult and doesn’t go to school, so they It doesn’t cost anything. Their kids are citizens, so they’re not immigrants, so that doesn’t count.

But obviously, letting in the immigrant means that their kids are going to be here, and taxpayers will be on the hook for that. That is, in fact, not a good objection. What is a good objection is this. Look at an American family, two parents, one kid. The parents are native born. How many people did taxpayers fund the education for? One, two, three. Let’s look at a family of two adult immigrants who came when they were adults and their kid. How many people in that family did American taxpayers pay for the education of? One. That’s something else that tips the scales in favor of immigrants. There’s a lot more going on here. You may say, Well, we need to consider not just the immigrant, but their kids. Fine. But if we’re going to consider the cost of their kids, we should also consider the tax their kids will eventually pay. You do all of this, and this is the thing the National Academy of Sciences did. When they came away with is that immigrants that have graduated from high school, which would be most immigrants from Latin America these days actually are a net fiscal positive.

To get a net fiscal, especially the young ones are net, so young adults are net fiscal positive. When you switch over to look at high school dropouts, then not so good. But again, we’re talking about a smaller group. Then what do you say? All right, fine. How about you let everybody in with a high school degree or more? That’s okay. Over there, I would say, look, thinking about only the fiscal effect of a person is not a good measure of their total contribution. If you think about someone who is a great entrepreneur, but they’ve also got a great tax attorney, so they barely pay taxes. I know that’s hard, but some people pull it off by being very clever. It’s like, Well, is that person a drain on America? It’s like, Well, they didn’t pay much in taxes, but you know what they did? They contributed to the actual economy. Yes, low-skill immigrants do that by taking care of kids and mowing lawns and picking crops, and all that stuff totally needs to be considered. Especially when you realize that most of the modern economy is services, and services generally can only be consumed by people who are in your immediate vicinity.

The main people benefit from immigrants running restaurants are natives because who else is going to eat in those restaurants? Right now, this is, I admit, a very complicated question. That’s why I put a lot of effort into it. I made a mistake in the book, and I’m just going to be honest. I made one mistake. There was one table where there’s a footnote, right? I didn’t read the footnote carefully, and I was corrected, and I wrote a post correcting it. Honestly, look, I would like to win the trust of anyone listening, including the trust of someone that doesn’t agree with what I’m saying. A big part of that in my mind is putting my worst foot forward and saying every mistake that I make. You realize I’m not someone who just sits around saying, I’m constantly vindicated by events. I am fallible. I have made mistakes, but I also, as a result, am prone to correcting them. When I’ve gone through things many times, I think that I do have unusual liability. Although, don’t take my word for it. Buy the book and check the notes. It’s all documented, so you can see whether I am being not just honest, but fully open with readers.

There were a few parts in When Borders, my editor said, Well, you don’t really want to say this. It undermines your argument. I said, Yeah, but it’s true. I’m not here to be a lawyer. I’m not here just to go and make a bunch of incompatible arguments and to cover up a bunch of inconvenient truths just trying to win. I’m to get to the bottom of what’s really going on.

Ben Nadelstein:

That’s why the subtitle is always the Science and Ethics of Open Borders or Housing Regulation. I really recommend you guys read the books, especially if you don’t agree with Brian, all the more reason, as For those who do, you’ll have some more ammo in your belt. Brian, before we get to the lightning round where I just rattle off a bunch of random topic questions and you answer, I want to know, how did you become so nice, so fair? You might be wrong, but you’re always very fair. You’ve come up with this ideological Turing test. I’d like you to talk about that and maybe how you became so nice, so fair. I think anyone would love to have you as a confidante, friend, or teacher, Bryan Caplan.

Bryan Caplan:

I love you too, Ben. I wish it were so. I’m just going to start by saying none of this comes naturally at all to me. I was a rotten kid. I had a terrible attitude in high school. If you read stuff I wrote in high school, it sounds like it’s written by someone who I grew up in a prison or something. I was so bitter. What do you got to be bitter about, kid? Everything’s fine. No, it’s terrible. A lot of this comes from just trying to acknowledge my own personal failings and work against them I am very prone to thinking that I’m always right. I could lean into that and just become a typical demagogic pundit, or I can say the very fact that I tend to have this overconfidence as a reason to triple and quadruple check my work, to read sentences and say, Do I really know that’s true or do I just want to believe that? That’s a big part of it. This ideological Turing test is an idea that I had. It’s inspired by the much more famous regular Turing test The regular Turing test was proposed by CS Pioneer Alan Turing, and he said, Look, suppose we want to decide whether a computer is capable of actually simulating human intelligence.

How would we know? Well, it’s not going to be a fair test if you just talk to a person and then talk to the computer and then have a person say, I don’t think the computer is that good. Instead, the idea was, How about we go and blind it so that you don’t know whether you’re talking to a person or a computer? Then we say a computer has passed the Turing test. If a human audience cannot tell the difference at a better than chance level. That’s the original Turing test. Probably, GPT is passing that Turing test with flying colors for a whole lot of things now. I mean, really, the main thing you got to do to not give away the store is to make it take a long time to give an answer because the GBT answers far too quickly and no human being is that knowledgeable. So there’s that. But anyway, the idea of the ideological Turing test, say, how about this is one where instead of computer versus human, It’s human versus human. Here it’s going to be a human who sincerely believes a view versus a human who does not accept that view but claims to understand it well.

Then instead of the audience being random humans, the ideal audience is actually a random selection of people who believe the doctrine. We’ve got, say, Paul Krugman, progressive economist, and we’ve got me, I’m the challenger. These are the two participants. Then what do we want to put in the audience? Let’s put a whole bunch of progressive economists. Ideally, they’re actually Paul Krugman’s own students, his best students, his favorite students. We get these people, and then we blind it so that they can’t see who’s actually talking, and they feed us questions, and then we give out our answers. Now, I have passed the ideological Turing test for Krugman if the Krugmanians themselves cannot tell the difference between Krugman and me from the responses. In this case, I say it is totally fair for me to say, I understand Krugman’s view. I understand his view as well as he understands it himself. Then the fact that I disagree, it doesn’t show he’s wrong, but at least it means that you should give me a hearing. It’s like, I’m not disagreeing out of some total obliviousness to your arguments. I’m disagreeing despite the fact that I understand what you’re saying.

I just think something else. Then just to make the contest really fair, then we flip the board around and then he has to go and convince a bunch of my fans that he’s me. This was all originally inspired because Grumman did a video where he claimed not for me, but for what he called the conservative economist, which is itself a failure of the ideological Turing test because there’s almost no self-styled conservative Economist in the world. There’s free market economists. That’s really like someone saying, Oh, I understand the pro-death position on abortion really well. You’re already using a word that would only be used by a pro-life person. You have given away your hand from the first sentence. This is not the way you play in this game. Come on, you could do better than that. I’m pretty sure. Anyway, Krugman claimed that non-progressive economists or free market economist didn’t understand progressive economists, but progressive economists did understand free market economists. I said, Look, that’s totally wrong. Honestly, the simple story is, look, in order to become an economics professor, you normally have to go to a top Econ PhD program where You must know the Krugman view because that’s taught by almost everybody.

On the other hand, you do not need to go to a free market university or have even a single class in these ideas in order to become Paul Krugman. Look, I think he’s smarter than me. I’m totally willing. I think his IQ is super high. When someone says, Paul Krugman is an idiot, say he might be a fool, but he’s real smart. There’s a different things. One is lacking in common sense and judgment. The other one is inability to learn with a gun to your head, and I think he’s awesome on that second standard. Not that I want to put a gun to Paul’s head. I’ve learned a lot from him. But just the hypothetical of if he had to, could he learn it? I think he totally could, but he hasn’t because he doesn’t feel like it.

Ben Nadelstein:

That’s totally fair. I’ve met economists who would prescribe themselves as Modern Monetary Theorist, SMT. Most people on the free market camp would say, These people are crazy. They just want to print money. Have they ever heard of inflation? That would be failing the ideological Turing test. These people have a sophisticated view, which I disagree with, but I could actually explain their views the way that they would say, Yes, that is totally what we believe. At the end, it comes down to how you believe resources resources should be allocated in one way or the other. But if you’re unable to, in their own words, pass the ideological Turing test, you’re probably not arguing in good faith.

Bryan Caplan:

Yeah, I will say 95% of people into MMT do have that idiot’s view. Then there are the people who are actual professors who are into it who are considerably less crazy, although it’s really still crazy.

Ben Nadelstein:

Happy to have any of you guys on the non-crazy ones to discuss.

Bryan Caplan:

It’s also a hilarious A nice example of giving your view a name that is not descriptive at all and just makes you sound like you’re the only sensible person in the world. It’s like, Well, I believe in ancient monetary theory, modern monetary theory. It’s not modern monetary theory. It’s held by almost no one in the modern world. So what are you talking about?

Ben Nadelstein:

Well, we might need a couple of rebrands for the free market approach, maybe, I don’t know, modern classical theory, which obviously makes no sense. So if we get a good rebrand- Or you could just not try to prejudge it with labels and gin, to be clear, which is one of my favorites.

Bryan Caplan:

How about we just find the words that are currently being used that are well understood and say that and then defend it instead of trying to poison the well with a rebranding? We’re not selling New Coke here, man.

Ben Nadelstein:

Well, some people are. Brian, let’s get to the lightning round. I’m going to ask you a series of random questions on random topics. You’ll give me 30 to a minute on what you think about it. Feel free to expand, yes or no, underrated, overrated, whatever you’re feeling. So, Brian, I was recently told, Ben, you’re so smart and handsome and beautiful and all these great things. You should take an IQ test. But I’ve heard IQ tests are biased. What do you think? Is this true?

Bryan Caplan:

No, IQ tests are not biased in any important sense. They’re not perfect, which is different. The main bias, which is small, it’s been documented, is that the tests are biased against groups that do well on them. The opposite of what you heard. The tests are not biased against Blacks. They’re not biased against Hispanics. They are probably a little biased against Jews and Asians because if you actually were to go and use those tests for prediction of success in real-world tests, Jews and Asians do well on IQ test, and they would do even better than their test scores indicate by a bit. Just to understand what that bias even means, a lot of the best research on possible bias and IQ test comes from the military. What they do there is they say, All right, look, let’s first give you a paper and pencil IQ test, and then let’s go and is give people training in a practical skill like getting a score in a flight simulator or not crashing a plane or something like that. Then we will, first of all, use the paper and pencil IQ test to predict performance on the practical task.

For that, you can see that the test means something, definitely. People who have high scores in the test do better after the training class than people that didn’t. Particularly, a lot of it is learning. You teach a skill that they didn’t know at all where everyone was terrible initially, but the people with good scores in IQ test improve a lot more, which fits what I think is the best working definition of intelligence, which is learning ability. You can be smart and know nothing about ancient Assyria. You can’t be smart and study the history of ancient Assyria for a year and still not know anything about it. But the key thing the military found was that groups that do poorly on IQ tests also do correspondingly poorly on the practical task. The only sign of bias really is that there are some groups that do especially well on IQ where it seems like they’re even better at the practical task and learning it than the IQ test would suggest, although that’s a small difference. But anyway, IQ tests are overall are not, they’re not perfect, but they are close to the best thing that we have for predicting trainability in a new task and also for predicting success of a kid who is yet less than 10.

It is considerably better than just using their parents’ socioeconomic status or something like that.

Ben Nadelstein:

I believe the book is, Bias in Mental Testing by Arthur Jensen. We’ll put that in the show notes for people interested.

Bryan Caplan:

Okay, next one, Brian. He’s actually now almost 25 years out of date, but there’s been some updates. But yeah, that book is awesome. But of course, we keep learning more, but it’s not much different from the earlier stuff. Just dotting the I’s, crossing the T’s.

Ben Nadelstein:

Brian, next rapid fire question for you. Ai is all the rage now. Do you think AI companions are going to make people more lonely or actually maybe less lonely because people can say, Hey, listen, I don’t have any friends, but at least AI, Ben and I can chat all night long. I can talk to Milton Friedmann Brian Kaplan, AI. If you’re elderly, this is a great way to have a friend. He’s maybe a robot, but at least he’s your friend. What do you think AI will make people more or less lonely?

Bryan Caplan:

As long as it’s just text, then I think it will make them more lonely. The key thing about loneliness is that a lot of it is very much a primordial experience of face-to-face contact with other human beings, or, of course, a pet. People can be less lonely from pets. This is very basic human beings. It’s something where it seems to be one of the most important inputs into human happiness. If it’s just text, then I don’t think it’s going to be able to simulate, even if it’s on a screen. I think what we saw during COVID was that zooming with friends is not that good of a substitute for hanging out with them in real life, you may say, Why is it so different? I’m not 100% sure that people who grew up on Zoom will feel the same as I do. I don’t feel like I can adjust. It’s better than nothing, but I don’t feel like I can just consider zooming with a friend to be a close substitute for seeing them in person. But maybe someone who grows up with it will be different. My guess is not. It’s just too fundamental to our existence as primates.

But if it got to the level of virtual reality, then maybe even there, there’s still the realization when you take the goggles off of, Oh, I’m alone, and this is fake, but maybe. It doesn’t mean that it’s not better than nothing. It’s always worth remembering better than nothing. Then the question is, will people then basically do the easy way out of, I’m not going to go and invest in trying to make real friends because I have this other thing? That, by the way, is a lot of the When people say, Well, it’s depression, it’s so intractable. It’s not intractable. The real problem is that you have to make your life even worse to make it better. It’s a lot like finding a job. You’re depressed, but finding a job is even more depressing. But you’ll feel better once you have a job. A lot of life when you’re struggling is making a conscious decision to make things even worse than they are right now in order that they can be better in the long run. Impulse control is crucial. Also crucial for friendships in general. Your friend says something that hurts your feelings. Your impulse is to purge them and never be friends with them again.

But impulse control says, Well, hold on. They’re a human being. They can’t interact with other people without just accidentally going and hurting their feelings. I’m not perfect either. It’s in my own best interest to forgive. If I don’t learn that, then I’m going to wind up being alone. I don’t want that for myself.

Ben Nadelstein:

Bryan Caplan, you are an economist at George Mason University. I’m going to read some quotes from you, a macroeconomic theory, and then we’ll have a little chat. So you say, It was bad to go off the gold standard, but there’s no remotely safe way to go back. And then, quote, number two, despite the lull in economic crisis since the mid ’80s, this was back in the day, the case for stripping governments entirely of their role in money remains strong. So let’s take those two. You think, Hey, we got off the gold standard. Might be hard to get back, and we should still strip the government of their monetary powers. So question, obviously, I work in gold. We’re working on bringing back gold standard by paying interest in gold. But there’s also crypto people as well who are trying to ask this money question, Hey, how do we move from paper money to some other form of money? What do you think are some tips you could offer those people, as As well as some of the disastrous effects of the current policy that we’re on now?

Bryan Caplan:

Well, I’d say, just to back up, so what’s the main danger going back on the gold standard? The main danger is what price do we go back at and which gold standard do we do? There’s the 100% It’s a 100% reserve standard where you basically could just define the existing money stock to be equal in value to the existing gold stock. That can be done. It basically consists in an overwhelming rise in the price of gold, which I guess all of your investors, do any of your investors short gold?

Ben Nadelstein:

No. What we do at Monetary Metals is we pay interest on gold regardless of the price. We’re not shorting gold. It’s either a gold rental or a gold loan.

Bryan Caplan:

Yes. Look, if you do that, so that is one approach, 100% gold reserve standard. It basically winds up then making the dollar worth next to nothing relative to gold, which, again, I can see it being an interest of your clients. That is one approach. It’s really extreme and pretty much winds up, say, sending out a big incentive of the world of let’s mine every ounce of gold we can find right now because it’s at a level of price that could easily be $100,000 an ounce. It’s like some astronomical price. On the other hand, if you go back to the thing more like the historic standard, then it’s like, Well, we’ll go back in a lower price, and then it will be fraction reserve. Then it’s like, Well, we got to go and get the price such that we do not lose our gold reserves or else, we’re no longer on the gold standard. That means It’s just that you’ve got to worry about all the historic problems of either inflation or deflation based upon this. It really is a mess. Now, the case for just getting government out of this entirely, I think the simplest one would just be to say, Look, we’re freezing the monetary base, and that’s it.

We don’t change the monetary base anymore. Whatever number of dollar bills exist right now is the amount for the rest of time, and otherwise we’re not involved. That, I think, is less likely to end in disaster, but still nervous. Say the main thing is that whatever complaints you have about the dollar, in the broad scheme of things, it doesn’t get much better than the dollar. Even with the inflation last few years, it doesn’t get much better than the dollar. It’s not true that under the gold standard, there’s never inflation or deflation. You know that if you go back far enough, then yeah, there were worse that happened, too. It’s one where I just don’t see that there are very large gains to be made because the actual difference between things functioning great and right now is fairly small, especially when you compare it to something like housing, where I’d say the difference between the status quo and laissez-faire is astronomical, and it would be way better to have laissez-faire But if you just say, under the gold standard, we have 0% inflation all the time. It’s like, even if that were true, all right, that’s a pretty small improvement over 2%.

2% is at a level where people really barely even notice. I just don’t think it’s that big of a deal.

Ben Nadelstein:

Yeah, Bryan, I do agree with you. The inflation argument, oh, prices used to be 2% less last year. I mean, obviously, when inflation is impacting you, that is quite terrible. On the other hand, people are earning inflation asset prices. I’ll actually send you, it’ll be in the show notes, a strategy that we have come up with CEO Keith Wiener on exchanging dollar bonds for gold bonds, because in general, like you said, just price fixing schemes where you say the dollar is worth this much amount of gold. Those always run into problems. This is the way to convert dollar bonds into gold bonds. We’ll put that in the description for anyone interested. Okay, Brian, final rapid fire question here. Javier Millet is a self-described anarcho-capitalist. Most people two years ago would have said, I don’t even know what that is, but I hear the word anarchy, and that sounds bad, and most people don’t like capitalism. So that’s just two bad things combined into one. But Javier Millet is the President of Argentina. Self-described anarcho-capitalist. Things seem to be going well there, but is this a lose-lose situation? If things go well, people can always just write them off and say it was a lucky fluke.

Ben Nadelstein:

And if things go horribly, they can say, See, this is why we shouldn’t have had capitalism in the first place. So what are your thoughts on anarchocapitalist Javier Millet I did actually spend quite a bit of time in January just going over everything that you could know about him then.

Bryan Caplan:

The main thing is… Well, we’ll just to back up. So how did he win given this bizarrely impopular view? He had some combination of Argentina’s having a disaster, plus he has some incredible personal charisma that seems to really appeal to Argentinians anyway. I would be scared by a guy waiting at Shane saw around, but apparently there is cool. It’s weird. Maybe there’s going to be a country where being a bucktooth nerd with thick glasses is going to be cool next. Who knows? But anyway, that is one of the least studied aspects of politics by economists, is just how sheer personal charisma can get a guy elected whose views are actually abhorrent to most voters. Economists normally figure people are voting for policies, whereas a lot of it is just the toad, the toad of the guy. I like the cut of that guy’s jib. In terms of whether it’s a lose-lose proposition, I don’t think so. I think if things go well, then it is at least a point in favor, and people can say you just got lucky, but that always sounds lame. Now, things Just given how poorly Argentina has been going, again, it’s a point against, but it’s also one where you can say, Look, the guy took over in a total disaster, so what does it really show?

In the Soviet Union, or rather, post-Soviet Russia. There really was a case where the free market wound up getting blamed for a bunch of stuff that wasn’t inevitable and just part and parcel of a massive transformation in the economy. Part of why I think it was so negatively spun was just there were so many people who were so angry about the move away from socialism in the Eastern block, and they were actually fans the whole time and cheerleaders, and then they felt so humiliated, and they were just looking for anything to complain about. So there’s that. Maybe they’ll get away with that for Argentina. I don’t think they have the same global army of apologists that the Soviet block had. So just never underestimate the power of the Soviet propaganda machine. Even to this day, when you go and read US history textbooks, you’ll see there’s a bunch of very minor incidents in American history that still get a page. These were on a list that the Communist Party put out in the ’30s and ’40s of just particular episodes in American history to never shut up about. They got people to really talk about them because they read us like, What does that prove?

All right? Yeah, it doesn’t prove it. Execution of Julius Rosenberg actually turned out he was a spy. His wife, maybe not, but she didn’t know anything. All right. Seems hard to believe.

Ben Nadelstein:

There are actually a couple of people who helped Keynes, I think, to transition us. Harry Dexter-White. He helped transition us from a more gold standard economy towards a more centralized paper standard economy. Turns out he was a Communist spy. So all of the Communist spy stuff turned out to actually be true.

Bryan Caplan:

Well, not all. Some, but Yes. At the time, I don’t think anyone of importance was so naive to think there were no Communist spies. When you go and get an education in a US history class today, I think you actually do get the impression that it was all made up. Anyway, we’re not talking just passing some secrets about our agriculture policy. We are talking about people passing nuclear weapons secrets, which is a big deal.

Ben Nadelstein:

Yeah. I think one thing to remember, at least for people my age and maybe even people your age, Brian, most of the stuff taught in school is about the Mayan civilization. And in the 1920s, there was Prohibition, which some of that is important stuff to learn and interesting to know.

Bryan Caplan:

It’s amazing to get to the 20th century, actually.

Ben Nadelstein:

Totally. But on the other hand, We pretty much stop around there. And then Mao, Stalin, those guys, we never really talk about them, even though body count-wise, they had some of the most historic kill counts of all time. It seems a bit odd. So okay, maybe final question here. Why do you think that people hate people like developers, capitalists, people who make a lot of money, but tend to excuse or maybe even wear a Che Guevara shirt when these people are guys or horrible people by any other standard.

Bryan Caplan:

Yeah, this is a deep question, and I think it comes down to this. There is a very deep set psychological tendency that I call anti-market bias. It’s been a big theme in my work, where, again, it’s that people just have a deep psychological aversion, and some of them, they just have an antipathy for markets in general, and especially people who succeed in markets. Now, as to why that is, I don’t have any really good story. There’s an economist, Paul Rubin, who says, Well, it makes sense because when you’re a primitive tribe, then trade is just a way of ripping people off. And it’s like, no, it wasn’t. You could say you’re close to subsistence, so there isn’t really any gain to trade. Look, it’s when you’re close to subsistence, that any gain at all matters the most. I don’t think there’s any It’s a really good story here, but it still seems to go back many thousands of years, and I don’t know any culture that doesn’t have it. I think about socialism as taking this basic human psychology and turning it into a philosophy. But long before, Before there was socialism, there’s still deep resentment of markets and the rich, and in particular, rich people make their money through markets.

But ultimately, I think it is a fact that human beings don’t like hearing about someone making their money through a trade, that they have a lot of just deep negativity towards them. You can see this when you have even very left-wing billionaires who get a lot of money, left-wing causes, and then read what the left-wing media says about them, and they hate them. It was like, You can’t win. Jeff Bezos can be trashed in the nation, even though he’s given a pile of money to left-wing causes. Just the fact that he earned his money by creating the best store in all of human history marks him as a bad guy. It seems crazy to me, but this is not just something that has been put, foiced upon, American kids by left wing teachers in the last couple of decades. They made it worse, but it’s very basic human nature. I just don’t know why.

Ben Nadelstein:

Well, anyone who is super rich loves the free market and is interested in learning more about gold, the gold standard.

Bryan Caplan:

And wants to get more rich, right?

Ben Nadelstein:

And wants to get more rich, check out monetary-metals.com Bryan, where can people find more of your book? I highly recommend Build Baby Build, Open Borders. Pretty much every book Brian’s ever written is really fun. So get those while you can.

Bryan Caplan:

Pretty much, Ben?! What do you mean pretty much? Just kidding. But all my books are on Amazon, and then Build Baby Build is supposed to be everywhere, Barns & Nobel, all those other stores, too.

Ben Nadelstein:

Bryan, thanks so much for joining us. We’ll be catching your book. Leave a comment in the description of the video. Tell us what you thought if you’ve read some of Bryan’s book, and we’ll have to have you back again soon.

Bryan Caplan:

Thank you very much!

Additional Resources for Earning Interest in Gold

If you’d like to learn more about how to earn interest on gold with Monetary Metals, check out the following resources:

The New Way to Hold Gold

In this paper, we look at how conventional gold holdings stack up to Monetary Metals Investments, which offer a Yield on Gold, Paid in Gold®. We compare retail coins, vault storage, the popular ETF – GLD, and mining stocks against Monetary Metals’ True Gold Leases.

The Case for Gold Yield in Investment Portfolios

Adding gold to a diversified portfolio of assets reduces volatility and increases returns. But how much and what about the ongoing costs? What changes when gold pays a yield? This paper answers those questions using data going back to 1972.