in his book, "how capitalism will states us, quote steve forbes argues capitalism is the best system to get us out of the current economic crisis and lead us to prosperity. the manhattan institute in new york city hosts the 50 minute event. ..

the book was written in an easy-going conversational style into q&a style to really explain the essence of the system of american capitalism, what it is, what a difference come answers questions about it and address the hostility and distrust ability of capitalism still seems to engender. there is a fundamental misunderstanding out in the world today, including the united states and particularly in washington and many state capitals as well about what is really capitalism. a lot of the myths have written about it that it's based on greed, but it does the rings, that it brings out the worst in people.

but as we try to explain in this book, it does exactly the opposite, that free markets do have a moral basis. unfortunately come even people who are sympathetic in general to free-market economics as many misunderstandings about it. and particularly, the paradox noted by joseph schumpeter the great austrian economist is a turn on the system. they feel ashamed of the system. so in essence, many of us feel like fish in the water. fish don't know they're swimming in water. we don't know what real free-market thereabout. and so because of that, we do things that end up undermining free-market. so people don't learn about free-market. colleges and universities were with a filthy enamored of march and came abolish economist in a big comeback. people most in the media certainly don't get it. so they're sort of this mistrust and hospitality that this is a

quite a moral system. so that's what we did it in a conversational style, as if you're sitting around a table having a discussion with your kids or your answer uncle or friends or whatever and discuss what it is and what it isn't an deal with what we call the wraps on capitalism. it also is a nonpartisan book, unfortunately there is no virtue when it comes to political parties. we point out that john kennedy, democrat for example, got it right on the dollar amount she said would be as good as gold, got it right on taxes and trade your ronald reagan, republican, certainly got it right on taxes and trade and inflation. though clinton got it right on trade and the importance of a stable dollar, or at least a strong dollar. and another republican, sadly, george w. bush did not get it right on the dollar which is right to some of the basic problems we face today. the book draws on free-market advocates from adam smith to

tomasello to many here at the manhattan to. so in that sense, in that sense it is an assemblage of living voices and adam smith is still a living voice today when you return and what he insights into the moral basis of capitalism. in the essence of capitalism, and this is something to keep in mind when you see those hollywood clichés of these evil, they're always start -- [laughter] , and greedy business types or sinister looking, whether it -- a sinister looking villain is that you succeed in true free-market only by meeting the needs and wants of other people. you can think of yourself as greedy, as for money, but you're not going to get the money unless you provide something that somebody else wants. it takes two to make a transaction. adam smith talks about the

butcher, providing the dinner. think of it today. you go to a restaurant, you want the food. the restaurant would like your money. restaurant gives you the food and you give them the money. you both get something out of it. so you can have that kind of personality so bold by novelist and hollywood about personally that makes alex barkin be described. last night but in a true free-market, you're not going to make it unless you serve the needs and wants of other people. and because the system is open in a free market, because it's voluntary, nobody makes you do things. it creates these anonymous arrays and web servers collaboration and it works because no one is in charge. it happened spontaneously, and meeting the needs and wants of others. you think of the needs and wants of restaurants. the restaurant assumes the

farmer grows the fruit of the food is delivered to the processor and the trucker will deliver the food, the truck will be made, i will be there, restaurant will have the equipment to cook the food and people to serve them. it's amazing all the things that no one we just take for granted. so that is why it underscores and strengthen morality, democracy, the basis of a free society. only free people can make these things happen and it brings out innocence even though we read about all the bad people and bad people exist everywhere, not just in capitalism, that's human nature has not changed for 4000 years, before even not. but it is a system so that if you want to succeed and not, it forces you to incorporate with other people without you even knowing it. it forces you to figure out what is another person want. it encourages you to be creative

and innovative and it doesn't guarantee success. as you know, most businesses fail within five years of inception. but because it allows for creativity, people are out there striving to do it. and when somebody comes up with something that she wants, that person comes out ahead, as reported rightly so, you come out ahead, getting something you probably didn't even know you needed here if we talk about the ipod economy. you know, think of it, a if use of the word ipod, people would wonder, is that some remake of a movie of aliens, pod people coming -- and now is something that hundreds of millions of people can't exist in mail must look like aliens now with hard wires coming out of our years of everything walking around. so that's the essence of the system. bad people? gas. every system is going to have it people. i capitalism, look at the essence has been the most successful system other in

enabling people to discover their talents, develop their talents, expand their talents as abraham lincoln put it to prove one's lot in life. so where's the role of government? sadly, james madison, father of our constitution, was exactly right when he observed that we are not angels. because of that, we need government. the government's role in free-market is precisely to foster an environment that allows free markets to flourish. that means the rule of law, which means laws against fraud, lost to encourage transparency, laws that enforce contracts we don't get the government doing what it did with general motors and chrysler and going in for political reasons and tearing up contracts should make a political payoff. as for countries like argentina have done and have turned themselves to one of the richest nations in the world to one of his perpetual trouble.

contracts, enforcement, we have laws to deal with problems that rise up. in terms of equality, absolutely central to have equality before the law because how else can a mere individual entrepreneur challenge the existing power structure that individual is not protected by the law. to many countries we see it and we see people attempt to do it here, use the law to quash new interest, to quash new competition coming to keep people out there who might accept their arrangements. her pretty red, very basic. if you own something, it belongs to you. they said a man's home is his castle. well, the decision of the supreme court four years ago has been undermining that. we need to get back to basics of property rights. this is not protecting the rich. it's enabling people to accumulate capital, take the risk to know that somebody's not arbitrarily point to come along and see that from them. the central for risk-taking.

so will of law, another one, the federal reserve has completely forgotten in this country, sound money. they will tell you for a current need. if you don't have a stable value for a currency, it just makes s. plentiful and more expensive. because it's risky enough to make an investment. but if you have to worry about the value of the currency itself, it just makes life infinitely more complicated and hurts us all. think of it this way, what would your life be like if we floated the clock? [laughter] sixty minutes in an hour one day, 80 minutes in an hour the next, 30 the day after, ten the day after, so you'd have to have hedges, derivatives, futures to figure out how many hours are working each week. adjustment is simple. keep -- keep it evil. another basic thing, another basic principle of courses

taxers. big topic. going to be a big one this year. politicians don't realize -- many people don't realize taxes don't raise revenue for government. taxes are also priced in a burden. simplistic to say it, but it's amazing how often we forget it. tax and income, price you pay for working, tax on profit, the price you pay for being successful. price on capital gang, the price you pay for risks that workout. lower the price and burden of good names like risk-taking, working productively, trying to be successful and lo and behold i may get more of those good innings. so removing barriers to business. not only trade areas, but here at home. but with the licensing laws that are out there. now when we need licensing for airline pilots, physicians and the like, but for breeding hair, it will live in the book for about two years.

i think he was minnesota weather we've had to go through elaborate procedures to greater for crying out loud. that's restraint of trade. so all of these priestly principles are moving barriers, sound money, so enable people to be creative which ends up helping the government. they never seem to realize it. lovelock, we can move ahead. government also has to respond to changes. one of the things capitalism does is bring about change. and you've got to bring the west to respond to that change. for example, late 1950's, early 1960's, xerox and in the copier. well, what about copyright laws when you can go and copy a book? the red rice of the fair use.. look at today what revolution is done, what the web has done. i've ended traditional ways industry-leading. you need new rules, new laws on

not probably debated. but though you have a government to deal with the things that bring about a change. rise of the automobile, rules of the road, speed limits, highway patrol, courts, insurance, the whole apparatus. so you need government to do that. of course government has to deal with disasters and when things go wrong and you get a katrina you have to do with that. also safety net. i think people would agree if people truly can't take care of themselves, something must be done. we are a humane society. but all that's very different. i typed about rules of the road. but what he meant was you don't go 100 miles an hour and a school zone. you're supposed to signal when you turn, but that's very different from the government telling you what to drive, where to drive and went to drive. sensible rules of the road. so that in essence, in shorthand, is what government is

about. the thing though also is that capitalism is destructive. we only think of economic growth, we tend to think of more of the same. no, it's not just turning out more recency chair, it's turning out better widgets, cheaper widgets, new kinds of widgets, but also capitalism changes society, should better did nasa study found that kind of change and this is where wise statesmen and since women can come in and make this change adjust to these changes when and suddenly something is destructive. we mentioned the ipod in about your ipod is a fantastic thing. gives people easier choice and wider choice of music. you don't have to buy an album as we used a college or a disk with 15 songs, only one of which you might want. now you pick what you want when you want it. in terms of tv programming, you have your programming now. you don't need the networks

anymore. it's there, you choose when you see it. fantastic conventions. but look what it has done. upending the music industry, not just the ipod but with lf has done. look what it does to stores who sold cds and disks. a lot of them are going under. so these artists. once an ipod and the web is if fantastic thing for artists because everyone now can broadcast music. internet radio, my goodness, thousands, tens of thousands of people -- hundreds, millions can put their music on that never could have broken through the old system. but it also means that under the old system if you did get the breakthrough, by golly you had a huge studio music is behind to take a few fantastic promotion. now you're just one of the zillion out there trying to figure out. someone so one of the things that happened to the concert industry has come back again. the book tries to explain what free markets are. but tries to explain iraq

finance capitalism, is capitalism moral? is not brutal? are the rich getting richer at the expense of other people? the regulation safeguard the public good? is the government needed to direct the economy? what about bonuses, made off, greed and the like? so, we deal with all these things. now what about the crisis. today? one of the things we discovered in doing this book is that contrary to belief of many, particularly in washington, economic disasters invariably have their origin in disastrous economic policies from the government, not some sudden failure of the free markets. [applause] without it section. whether it's the great depression, smoke while he terrace, numerous road regulations, massive tax increases, federal reserve, often the stratosphere, the

terrible inflation of the 70's, federal reserve again. and this disaster. federal reserve. now i know saying the word said eyelids get heavy. there's no more boring subject in the world for monetary policy. alec knowledge that and in and i give you a travel tip. if you ever find yourself in an airplane and coach, middle seat on the runway, watching your life passed away, you want a little bit of elbow room, tackier seatmates about monetary policy. [laughter] you'll have all the room you want. or if any of you are single, want out of the day, talk about monetary policy and he'll never see that person again, guaranteed. but in essence, monetary policy is similar to an automobile. you can have a magnificent vehicle, but if you don't have

significant fuel, you saw. too much feel, you flood the engine. just the right amount, you the chance to move forward. same is true of monetary policy. the fed gets it wrong. you get the equivalent of stalling for flooding the engine. the early part of the last decade the fed started to prefer it on reasons too much money. they artificially cut interest rates low. ladies and gentlemen, we cannot have a housing bubble if the fed hadn't supplied the fuel for it. it just could not have happened. any time, especially a bank is important to the federal reserve, prince too much money, provides excess liquidity, bad things will happen. in this case, it hit the commodities market that is always does and then went into housing. in the 1970's, it would especially in the energy industry and an agar culture and a commercial real estate. look at iowa in the 1970's. their land prices soared, prices

soared, this is going to go on forever. the crash came in the 1980's. texas energy, then we'll energy space had a depression in the 1980's. in fact, every major bank in texas when under once controlled locally. every single one either had to be liquidated or bought out by another bank. so it's just where it's going to happen. or when the fed makes them a stake, bad things happen. freddie and fannie, fannie mae and freddie mac to government can unshared out the bubble. $1.5 trillion is suspect eber, no private companies could amount on such a scale. and then when the disaster hits, another utterly boring subject, accounting. government regulation changed. anything called market to market accounting deals with how do devalued bank capital.

traditionally, the bank but a bonsai $4000 for regulatory purposes it was kept on the books at $8000 a month the bond went bad for the banks of the bonn. otherwise for regulatory purposes or capital purposes, kept about 1000. but in all part of the last decade, especially 2007 the robust change creeping up like a day trading account. so when the market turbulence, suddenly banks capital was not just suffering -- is suffering a hit from that paper, but also for perfectly good paper where there wasn't a decent market. so if you look at the actual losses of banks and insurance companies, do you realize most of those losses came from book losses, artificial losses, not actual cash losses on their assets. if we market to market accounting 20 years ago and a banking crisis remember the savings amount disaster. commercial exploded with latin american loans, commercial loans, commercial real estate

loans. take the eight top, tens of commercial banks in this country, and you would have capital three times over just on the basis of the latin american loans. we were stupid 20 years ago. so we had have market to market accounting. every single one of those, the fed, fannie and freddie and crazy regulatory accounting all came from the government. so where are we are today? thankfully last year in march and april thanks to hold your seats, congress [laughter] occasionally something good comes from it, they put pressure on the sec, what they call the financial encountering board market was amended to what should've been suspended or prohibited, but it was suspended or at least modified. that's when the stock market turned and that's when the credit system started to work again. so where are we at now? thanks to the ending of the

market to market, credit system is partially working but not whole again. still small businesses and individuals still have a hard time getting credit, very, very uneven because regulators. i love that the president goes out and says land banks. he's not bashing on. and then his own auditors go to the banks and say, shore up your capital, tighten your lending standards. that's very much encouraging moms. so the system is a fully working yet. and it gets to the value of the dollar. weak dollar means weak recovery. we should've learned that from the 1970's. if you have a weak currency coming for not going to get a strong and durable recovery. you'll get some recovery. economy is very strong inherently, but you're not going to get a durable one such as we had after the early 1980's for over two decades. so, keep this in mind, a couple of little thought to it.

when government spending goes up as a proportion of the economy, unemployment goes up, trends out here and from the mid-1960's to the early 1980's, government spending trended up and unemployment did as well to the point where economists thought while the lowest you can get unemployment and not have it better grip of inflation is 6%. reagan came in, cut tax rates, got rid of the terrible inflation, did other positive rings. suddenly eventually you can get it down to 5%, then 4%, 3.9. now look where we are today. now will be lucky if we can get it down to seven or eight and recovery. administration will hail the progress, but 183.9, which is what you get if your rating government spending. same with stacks. spending goes up over time. i'm not talking month-to-month

and that kind of thing. stocks go down or stagnate in real terms. so, free markets work varied and let me just close by dealing quickly with an area where people say, while free markets don't work and that is health care. we have a whole chapter in the book on health care. people say well, it doesn't work there. we need government to help out. we don't have free markets and help here. we have a hybrid system, but we don't have true free markets. think of it. you ask people, why is there health care crisis? people want more health care. people are living longer. well as i get older, i don't think longevity is a crisis. my heirs might, but i kind of like it. last night think of it, and the other part of our lives, people what were some and, they say what a great opportunity. people want more cars, detroit would be very happy. weis demand for more health care

considered my god, what a disaster. huge liability. we can't afford it. it's because of the crazy way we pay for. it's third-party. the consumer, the patient does not charge of the resources. think of it. you're working on your employer offers you health insurance. that's nice, but sort of take it or leave it. so the insurance company, whenever they respond to the system, why then don't worry about the employee. they want to make sure the employers happy with them. the employee may not be happier if they wish the plan was little different, but you don't count. you're not writing the checks. you are not paying the bills. it's the employer. for so the system is cured to bureaucracies, insurance companies, employers heard it's not that system, but it's not a sustainable system. think of it this way. you go to a doctor, good go to a clinic, good or hospital and ask what something costs.

by that means you either don't have insurance or your lunatic. [laughter] why else would you want to know. what's it to you what it costs? you not. you crazy. and everywhere else we want to know what we're going to get for our money. so you don't have true free enterprise. you don't have the kind of constant innovation. you don't get more and more examples of wal-mart offering $4 prescription in sort of a document box where you can go for routine medical procedures at a local facility and have a registered nurse take care something quickly, efficiently at low cost. if it's something the nurses say you have to the hospital, but you don't have to go the emergency room affiche bring your ankle or something. they get that does exist. so can we get free enterprise in health care? of course.

to start a few for some of the proposals, nationwide shopping on health insurance. i lived in new jersey. like new york with nutty regulations of policy cost me 15 or 20,000 in new jersey can get in pennsylvania probably before 8000. illegal to do it. why? to can buy a house in pennsylvania, but not insurance. the going tv, radio, sailed the stats for auto insurance, progressive, geico, i'll stay, nationwide, all of them. when is the last time you saw a similar ad is a gecko selling life insurance. you've got to remove those terriers. equal tax treatment. business gets a tax reduction by the insurance, why shouldn't you? so if you don't like what your employer offers her employer doesn't offer anything you go shopping on your own and not suffer huge penalty. tort reform, what about allowing small businesses to pool together to buy insurance? basic stuff like that. and people say okay, that's all well and good, but what about

the amateur, what about people with chronic condition? would what do we do about them? pic of a something even more basic than health. food, no food, no nothing. and yet, look at food. farmers grow food, private companies processed the food, truckers deliver the food, restaurant stores, so the food. imagine if the government said because some people can't get food, we have to take over growing, just your breeding and selling of food. you've had the soviet union again. there'd be no obesity problem. we'd all be starving. last night and so what happens is people with food banks, food stamps, why can't we do the same thing in health care? allow for the free enterprise and help care if there are specific albums. you with the specific problems. government is not to take over the whole system to you with specific problems or charities

to deal with specific problems. and can you get free enterprise in health care? wigging of the two examples. lasik surgery on the eyes ice because you write the check or it costs less in real terms ten years ago. providers are always trained to strike jamaica more attractive to you. cosmetic surgery. and if you need it. [laughter] that's called pandering. [laughter] i tried it in politics, didn't work. which is why we're meeting here inside of my library, my presidential library. [laughter] but think of it, cosmetic surgery, big growth industry in the united states. the big growth industry demands it's grown sixfold for a period huge technological advances that you don't have the kind of inflation the chief of the rest of the medicine wide, must result is an accident. you're in charge of pain and writing the check. so what do you do if you want the procedure done? wanted to scope it out like you

do for anything else. if your friends you can keep their mouth shut, you might ask them and you deal with it. and so, that's what health savings accounts for moving barriers they are. your employer can put the money in accounts, but you are in charge of the resources so the system is cured to u.s. individual, not to third parties. it can work. so in essence, in a sense, we face a crisis, but it is no reason why if we do a few things right. stable dollar, lowering taxes, recognizing the proper role of government in a free market economy. we can quickly get out of this. people -- and then we'll get to the q&a. people say it's so hopeless without these funded liabilities. here's what you do, recognize their liabilities and their assets. if you have the kind of vibrant growing innovative, inventive economy that we had in the 80's and 90's in the early part of the last decade, with a new companies could flourish, that

means not only get economic growth, but asset values go up because people see future so they're willing to bid for assets. so you take the 1980's under ronald reagan, even though the national debt tripled when of 9% in chile when i join with a lot of money. [laughter] 1.7 trillion. you know, he spent a lot on defense. it was a good investment. it won the cold war which no one thought was possible. so when of 1.7 trillion. and you realize the wealth in of the nation went up $17 trillion? grow the assets. americans today, even in this terrible economy have gross assets of $67 trillion. net assets of 53 chilean dollars. you've got a 10% or 20% increase in assets because you suddenly have people see future. you see a vibrant future again.

10%, 20 were sent increase in assets overwhelms the stupidity coming out of washington. and then on the liability side, health care, those liabilities assumed in medicare and medicaid no part of it maybe. you're allowed to bundle free enterprise will flow over into medicare and medicaid and we can make reforms on that and touching q&a on that. social security, forget it for my generation. but there's wealth in the nation to pay those liabilities. the key thing is, make sure younger people go into a new system where they owned their own personal account, where that money is invested in the real economy with dropper safeguard and not bridges to nowhere and whatever else they invent in that town. you do that, over time, as we go to her ultimate report, the cost of social security will start to abate and you get a vibrant system where you make the choice when you want to retire. the amazing thing is people end

up with more in benefits than they get from the current disastrous assembly have today. so free markets is about markets are people. remember that. and free people as i pointed out proper rules of the road will figure these things out to people who constantly figure if there's a need, how do we deal with that? how do we make it an opportunity? that's the blessings of liberty. thank you very much. caught back on [applause] >> so, we'll field some questions. just wait and i'll acknowledge you. wait for the microphone to get you because were having this on c-span so we want to make sure the television audience hears her question as well. actually, bob were in the back. we'll start there.

>> well, you mentioned joe said sheepherder and maynard keynes. i would gather you have detoured schumpeter, but apparently the white house didn't. so how would you have worked this out between the two? >> well come as you know, james froze up to prominence. he was prominent in britain before the great depression, but that's when depression made him an icon. the depression was seen as a failure of free-market even though it was government disastrous policies that created that disaster. for free markets got the rap for it. friedrich von hayek made a huge public relations mistakes and government should do nothing and said i the same they should reduce taxes. and so keynes, the figurecome in very short hand. for a while keynes won the debate in government was seen as the stabilizer of the economy.

government is not a stabilizer. it can provide safety nets for people, but don't mistake that for stabilizing the economy. stimulus programs and i'll be blunt about this, never work. name me one that is ever really thought about stable, long-term economic growth. never, ever. stimulus means you take money from one pocket and put them in another. it's the equivalent of taking a bucket of water from one end of the pool and pouring it to the other and with some evaporation between. it does not increase the supply of water in the pool or do you only do that with incentives. so keynes pathetic comeback. government helps track the economy, free markets get the rap and when governments make mistakes like inflation, keynes contemplation right when he said what a disruptive social force others to read it undermines the moral fabric of society brings out the worst in people. you see it in wall street. those werewolves were at about

wall street's terrible behavior. you can shake a fist, that's fine. but if you have a stable dollar, suddenly the train profits and currencies go down exponentially. commodity prices are less violent in nominal terms in when the dollar is just what commodities of price and stable. you don't create inflation. you don't get excess profits. what happens with inflation, you're as good a huge run-up in commodity prices so it looks like oil executives are gouging you. this happened in the 1970's. it happened again a few years ago and it happened again today. if they keep this up. and wall street would never have the profits and those bonuses and everything else that we have a stable financial assist him. now that doesn't mean we don't need reforms in the system. we have to get rid of, for example, this idea too big to fail. cannot have added a free economy. that should be studied very carefully. but in terms of keynes, what do you do a keynes? you fight them with looks like

ours, debate and the public and save free people, not a handful of mandarins in washington. someone actually thought very sophisticated man in many ways but he actually got a handful of enlightened people could get the economy, ignore the thing called politics. people are going to put pressure on governments when government has powers. and he just -- that sort of glided over his head even though he was a man of the world. so he's wrong. and by the way, just to trumpet our and low are little bit, in 1982, which was a centennial of both schumpeter and chance, we did a cover story by peter drucker, the great management guru, very classic. he wrote on keynes and schumpeter at the time most people had not heard of joseph schumpeter but now he's a much more popular than he was in the

teen 82. keynes was supreme. and he compared the two. and schumpeter i think when the debate. schamberger realizes the entrepreneur who brings about growth and recognized also the disruptive impact of capitalism, which is what stays people should be focusing on dealing with the disruptions, not trying to either prevent them or have the government when the economy instead. [inaudible] >> wait for the microphone here at >> it's a very simple question. if you drive any kind of vehicle similar to kind of one that was driven in the state of massachusetts? >> my wife does and so far i've had no word that she is going to make a midlife career change. and i tried to change. so even if i drove a truck, it

would not be to be more for picking up things, not votes. and i'm an agitator now. i tried it twice, so i have to stir things up. [applause] [inaudible] >> if you are against or think about the market as being sort of wiser than necessarily the government and you wanted a stable dollar and politics out of it, wouldn't that be better just to have the dollar be kind of a commodity that is produced by independent printers or not by the government? >> well, there's a whole -- there's a whole theory from a

very number of people that is called what is competing currencies. and lawrence white and others talk about it. i think for our purposes now, people are just going to say you have to worry about whether we have a 30-dollar for the at the bank of america dollar or gold dollar. i think the thing to focus on is how to get a stable value for the dollar so you're not relying on the federal reserve. and that is, imbecile horrify economists. and that is you have to have a tied to gold. so if you want to be sophisticated, a basket of commodities they don't look quite such like a barbarian. spreads between bones, you know, just so you know that you're not quite the simpleton i just make myself out to be. last night last night last night had rap at the depression.

and we do deal with it in the book. but we have the dollar type to go right to the early 1970's. it was called the bretton woods international monetary system. and a largely worked until we blew it up. it wasn't just president nixon who did it. there was a whole idea a new idea we didn't need to have this anymore. so since the government has the monopoly on the money, the creation of it should be tied to gold. why? because it is a study value. you can't destroy it. you can't eat it or drink it, so with all this been supplied without your, so you don't get supply shots. it's like a polaris. not perfect, but better than anything else we have out there. and the federal reserve itself is has been out there 96 years or so having humans try to do it does not work. only two jobs, stable dollar and

dealing with panics. and in terms of gold, just to show we can be modern, you don't have to own an ounce of it. while the fed would have to do is look at the price and pick a range so we don't look like were inflexible. at the range and just pick numbers here to say a hundred $50.90 an ounce. so i went who goes above 900, the fed will tighten. if it goes below a 50 it will loosen up. not, don. so it will give some employment. so you do need a gold case and bernanke to him it's anathema. he buys into this falsehood that gold caused the depression era it they it didn't, but that's another subject at another time. but you need stability, absolutely need stability.

>> i'm almost at a loss because it's a unique experience to agree with everything. >> you're obviously a bright man. last night's >> had an idea you would say that. but i'm not totally at loss. i'll give it a try here. i was intrigued and pleased that you mentioned that capitalism has a moral basis. the founders asserted that man has raised and that to secure these rights, governments are instituted among men. not that my death to appear laissez-faire separation of state and economics. would you expound a bit please on the moral basis of capitalism anti-individual rights with everything you said? >> well, to succeed with the free market, as we pointed out you do need to satisfy and serve the needs and wants of others. and it brings out your creativity. and it's also -- it's more

precisely for that reason. it allows you to develop your own particular talent. and because it creates not just wealth in terms of a bank account, but in more and more kinds of occupations and jobs, he gives people a chance to develop talent that may have been irrelevant 50 or 100 years ago. take michael jordan, perhaps the greatest basco player ever. if you didn't have basketball, i've tried baseball, he didn't get very far with that. and what else? but because there are so many things that people could pursue, he could find them anywhere yet a very unique talent, a very profitable one. so in that sense by giving people such a range of choice, they do have come if they wish, pursuit of happiness, discovering what is unique about themselves and being able to develop it. and the nice thing is in that moral system is your success is not at the expense of others.

for not robbing a bank. you're not shooting somebody, plundering their farm in that kind of thing. our founders understood that we're endowed with certain energies and ambitions, particularly hamilton and franklin and how do you devise a system with those energies and ambitions can be constructive instead of something just have to be ranked in because it leads to destruction. and that's a commerce is about, precisely because it serves the swans. and i have to have a basic value of morality that people don't believe in the rule of law. then all bets are off. if you believe that you should always try to cheat your neighbor, the system is not going to work. you're not going to get very far. so u. you do need the basic core of values and the system will in fact reinforce those values, the

reports look into the future, the rewards collaboration and working with others instead of going off in a cave and shooting everybody. and so, hamilton understood it, franken understood it. so here we have the seeming paradox. the united states, the most commercial nation ever invented and yet we're also the most philanthropic nation ever invented you people think, what a contradiction. no, both serve the needs and wants of others. different skill sets, i'll acknowledge that. but two ways of serving the needs and wants of others he said this idea that you make your corrupt bargain in commerce and then you make up for it by giving it all away. no, you give it away because you are trying to serve others in a different way. that's what it's about. so two sides of the same coin, car simply enter free goods are not polar opposites, the two sides of the same coin. america exemplifies it and we

don't know it. serving the needs and wants of others. now i make it sound like a very pretty system. people are not always pretty. the nitty-gritty of day today and our founders understood that, which is precisely why is he pointed out, you have separation of powers. you have the checks and balances. they feared passions. they want government not to be efficient so that you don't get the funnest things. they were mortified by the 30 years war, the passions that led to that. so they understood our limitations, but within those limitations they created a system that enabled people, as lincoln put it, feel the better angels of our nature. [inaudible] >> thank you. i'm michael myers, new york civil coalition. the definition of free market is astonishing to the sense that it's aspirational as opposed to reality.

how do you have a free market in a society where government is tied to everything, including the federal reserve to tariffs, policy to food subsidies and other subsidies to private enterprises through bailout for big corporations. it goes on and on and on. government is in effect a central part of our economy. so not to even mention tax policy and tax relations policy to the government plus minorities and women. how do you in this reality, this free work of modern american society say that this is a free market environment? >> well, despite what's happened in the last couple of years, in the context of the real world, even though there have been a lot of assaults, people still had more scope to do things in this country than most other countries. to look at western europe,

japan, stifled by taxes, stifled by regulations, which is why they're all trying to immigrate here. and britain until recent years was moving in that direction, which is why sir cousy, when he ran for president several years ago said the largest french-speaking city in the world was london because i'll be onto printers are going to london and couldn't hack it in the thicket of france's regulations. so you don't get perfection, but one of the reasons why we did this book was precisely to arm people to do battle so you can start fighting back. remember, before the great depression, the federal government was 3% of the national economy. spending was at about 3%. states were more, but small potatoes by today's standards. because the depression was seen as a catastrophic failure of free markets, plus the catastrophe of the first world war, the whole moral strength of

the west was dissipated. we got totalitarian movements and the relics of it are still here today. you look at the philosophies of al qaeda and others. it's not, i don't know, misreading of the koran, marxism, totalitarianism acumen of world war i. it's about time, but that doesn't mean we can't reoccupy the higher moral ground and roll back of these areas for government is not playing a constructive role. and that's why i always thought, especially after 1994 when the gop republicans won control of congress, one of the things i think we fail to do was focus on the big things. there are a lot of junk programs in washington, tens of thousands. the focus on the big ones, the corrupt tax code, out of the lobby in washington revolves on the tax code. you get something rid of that.

huge game against the leviathan. on social security, when younger people to have their own personal accounts with proper safeguards, huge assaults against the leviathan. health care, same thing. education, same thing. you know, having parental control of education. he won the battle and those four areas: health care, education, tax policy and social security. like ali, we are -- the rest we can deal with. on the federal reserve, that was created on the idea of dealing with panic and the elastic currency. and well, we know what happens when the elastic current the. it just becomes a very, very elastic to where everything becomes worthless. so we have to have proper safeguards there. and so yes, we have a lot of imperfections, but we can certainly deal with the worst of them. and give a lot more room and

scope for free people. and the nice thing is, once it starts to happen, then it starts to reinforce the cells and understand that when disasters happen, it's not some sudden failure of free markets. it's usually a failure of government policy. not malevolent, but by golly the result is a disaster. and that's what we've got to keep in mind. and don't be bashful about fighting back. they don't occupy the high moral ground. [applause] [inaudible] >> this'll be the final question. >> steve, people's faith in market capitalism tends to rise when job growth increases. and certainly it shows that people are concerned about lack of job growth, unemployment rates, so forth in the election

of mr. brown of massachusetts i think is evident that the president can do just one thing, just wanting only to improve that matcher, what would you advise him to do? >> well, if you mean by wanting only that means he cannot go forward on health care the way he wants to do it, capping tax, a lot of these other things. first and foremost and the raise taxes. first and foremost with the a stable dollar. and so we can get real investment again. reagan understood it, john kennedy understood it, he had a stable dollar so that it's a moral issue, too. if you earn a dollar for your labor, why should politicians change what you got for your labor? it's not right. it should be stable by 12 inches and a further. imagine building a house if they floated the fudge. they have a housing crisis now. last night 12 inches and a foot

one day, 20 the next, 30 the next, it would be a disaster. so start with that. i have a list of other things but if you start with that, then you can start to build on other areas. the most immediate one and this will talk about his reforms and everything does not get a job creation. stable dollar will go a long way to giving the banking system working again for people can get a with viable lines of credit again. >> thank you, steve. >> thank you. [applause] [inaudible conversations]

>> were at the annual feedback conference in washington d.c. we're talking to christian tappe a i backs. what were your biggest sellers of 2009? we have the to book a conquest by dmitry rid of the history of the supply-side economics. we also had rendezvous with destiny by craig shirley, which is history of the 1980 ronald reagan campaigned for president. we also hade still hold these truths by matt spalding about restoring the principles of the

constitution. >> and what do you have coming up in 2010? >> we have a biography of william f. buckley called the founder of the movement by lee edwards from the heritage foundation. we also have a book called whittaker chambers as part of our library of modern thinkers series by richard wright and we have a book called seize freedom by representatives mccarter, thaddeus mccarter. basically about restoring principles of conservatism in the coming years. and finally we have a book called the closing of the muslim mind by robert riley which is about the intellectual differences of muslims in western christians and how that needs to be resolved first before we go further. >> do u hav any authors who are signing books here today? >> we do. matthew spalding of we sold these truths, he will be signing

books and also craig shirley who wrote rendezvous with destiny will also be signing books. he will be tomorrow, though. >> can you tell us a little bit about isi books in general. how long has the company been around? are they a part of another publisher? >> isi books has been around since 1993. we're part of the intercollegiate studies institute, which does work with college students, college professors, student newspapers and isi books to an extent facilitates that by the cultural bench with the aim to restore some of that culture that we've lost in the past 50 or so years. before that, isi also publish books, but not under our own publishing. we had to go outside. but since 1993 we've been dependent on trent independent. >> as the ideological -- is there an ideological concentration?

>> yes. more bringing back the intellectual and cultural underpinnings of cultural conservatism. not so much this is what we need to do now or taking action, but trying to bring back the thought in the culture and to the movement and just get people tuning about it and ruminate about the topics that were seen being played out on the political level. >> thanks for your time, christian. "new york times" columnist judith warner expand health insurance coverage for behavioral disorders in children such as adhd, asperger's, ocd, bipolar disorder and dyslexia. the icm theatre in los angeles hostess hour-long event. >> well, first of all i want to say they thank you to writer's block. it meant a lot to me as i was starting out as a writer in l.a. i just didn't know how to get from here to there. i was a schoolteacher.

and i had some pieces that i was working on and i would come to these events. i think they were at the directors guild, writers guild, yeah. and somehow you don't have a model, a role model when you're trying to become a writer and i would go it was so exciting to see these writers. and you would learn about the book had written, but also get these kinds, both are scheduling, what was their daylight. and i really was fed by that. so this is community in los angeles. and thanks to icm, where else would you go to discuss mental health? just screams mental health and psycho from a logical medications, which one has it been tested right here in this room. it's a stage one clinical trial right here at all times. and the tv, we love you but tv and your people if you're watching us. you know this weekend or in 3012 or something,