very healthy process. when you prevent markets from correcting, you push problems into the future. let me give you a couple of examples. keeping businesses in business that should not be in business is a good thing. citigroup has failed three times. they will get a bigger and they will kill again in 15 years. -- fail again in 15 years. main culprits the of creating problems in the automobile and the street. they invented the one under% seven-year car loan. what that meant is that a lot of people over a lot of money on their part that it was worth. worth. than it was so

bb&t has been in the automobile business for 50 years. a more interesting story is chrysler. chrysler failed in the early 1980's, bailed out by the government. they failed again. what if chrysler had been allowed to fail in the 1980's? their plans -- their resources would have been redistributed. where would they have gone back some of their resources with a gun to ford and general motors. -- there are resources would have gone to ford and general motors. what they learned is the government is going to bail us out. if chrysler had been allowed to fail, they would have learned a different lesson.

a lot of the resources may have gone to a private u.s. company. that company may have been a non-union company. people talk about the genius of the japanese automobile industry. the only genius is they operate in the non-union plants. we would have a much healthier automobile business if chrysler had been allowed to fail. we of not allowed people to foreclose on houses that kept the housing market from the bombing. it has driven house prices lower than it would again. why's that? they are not gone to buy a new homes if they know the price is going to go down that quick. there is a huge inventory of foreclosed houses.

the inability of the real-estate market is a drag on the economy. most economists will have to admit the stimulus program did not work. it is not surprising. do you believe that spending money that you do not have on things that do not need to be done is gone to raise your standard of living? that is based on a theory who was a famous economist. in his book, he argues that under adverse circumstances, you should pay people to dig holes and the ground and then pay people to fill them back up. if you want to stimulate

activity, cut taxes, but make them permanent tax cut so people can plan ahead. a lot of those job creators -- if you want to create jobs, you have to great set incentives for people that create jobs. be a that a massive increase in regulation. we have -- they change the law pretty radically and we have that a tightening of regulation in the u.s.. introducing a new regulation, new rules, ambiguity is very destructive. i teach leadership at a business school. one of the things that you teach people in any adverse circumstance, the worst thing you can do. when people are concerned and they do not know what is going on, they become more concerned. they assume the worst. whether you think obama health

care program or the dodd-frank financial bill are good bills, they have terrible timing because they have created a huge amount of uncertainty. a lot of small businesses are not hiring people because they cannot figure out what their health care costs are going to be in the future. the economic discussion is very interesting. it is far more important is the philosophical issue. this is not an economic crisis. this is a philosophical crisis. the real cause of the financial crisis is a combination of altruism and pragmatism. where did affordable housing come from? everybody has a right to a house provided by you? everybody has a right to free medical care? my right to free medical care is my right to imprison a doctor to provide me that medical care. that is exactly the opposite of

the american concept of rights. you produce what you create. you do not have the right to what anybody else produces. in business, businesses may pay lip service to all tourism, you can not be successful in a competitive market. the philosophical position -- what we teach in brentwood business schools is pragmatism. pragmatism's -- pragmatists do what works. a lot of things work in the short term that are very destructive and the long term. there is also a deeper problem. if you are a pragmatist, you can not be rational. if you are a pragmatist, you cannot have integrity. if their goal is do what it works, there are no principles to act consistently.

it is the free lunch mentality. nobody proposed a serious solution for social security and medicare. if they had, they would not have been elected. the free lunch mentality leads to a lack of personal responsibility. the lack of personal responsibility is the death of democracy. the founding fathers talked about the tyranny of a majority. they also realize that when 51% of the people figured out they could get a free lunch from 49%, the party is over. just like the cause is philosophical, so was the cure. life, liberty, and the pursuit of happiness. each individual's right to their

own life. each individual's right to pursue their personal happiness. ifh individual's right -- they produce a lot comment they will get a lot. if you think about that, it demands personal responsibility. there is no free lunch. it also demands and rewards self discipline. liberty is very important. that is an old idea. before jefferson, everybody existed for somebody else is good. nobody existed for their own good. jefferson says each one of us has the right to your own life. success in that pursuit of happiness, we have that right. that idea change the world. when people have the right to

their old life, they're nicer to other people. the united states was the first country created on the idea that people should act in their own self-interest. not taking advantage of other people, but not south sacrificing. we help our clients be successful and they help us make a profit. my favorite book -- it is very relevant today. she wrote the book in 1957. current predictions are coming true. -- current predictions are coming true. the bad guys are writing the book. where do we go? we are struggling.

we've never had a recovery this week and we have hardly had any recovery at all. i do not think we are in for a second dip unless europe collapses. they are 20 years ahead of us which is an interesting lesson economically. we're more likely to have stagflation. it looks like higher inflation, particularly in commodity prices. not good times by any means, but not horrible times. what really scares me is long term. everybody in this room ought to be worried about long-term. if we continue with our altruism, free lunch mentality, the united states has in place mathematically certain an economic disaster. if you look at the unfunded

liabilities under social security, medicare, public pension plans, they are in excess of $100 trillion. it is a stunning number. we are running $1.30 trillion annual operating deficit right now. we have a dysfunctional foreign policy. we have a big problem with the retirement of the baby boomer generation. a lot of us old people want to keep being fed. if you look at japan, it is all explained by demographics. they have too many old people. we have a failed k-12 education system. we were running the numbers for fannie mae and freddie mac. it is mathematically certain that we will go broke. if we do not change direction.

countries do not file bankruptcy. countries print a bunch of money and they use -- it is a cycle. it is exactly what has happened in this phenomenon, more government interference. argentina, 1940, higher standard of living than the united states. we are the next argentina if we don't change direction. we can change direction. it is not too late. we do have to change direction relatively soon. we have to do something in the next five years. here is the dilemma. we cannot do something without pain. i use the analogy. it is a form of terminal cancer. will not treating ed, we

die. it is not treatable without any pain. do we have the courage to deal with the pain? that is the fundamental issue. we have terminal cancer from an economic perspective. i like to talk to young people because we are setting you up for the bad times. i happen to be in the optimistic group. the reason i am optimistic -- i think the two-party -- tea party symbolic of the american sense of life. we are independent people. we are very productive people. we can fix this problem. we have never gone through this,

but the 1970's were really bad and we turned it around. we bought some time. what makes be encouraged is the american sense of life. it is a very intangible thing and we need to provide the intellectual ammunition. one reason i tried to talk to groups like this, the people in here are leaders. you have an impact on other people. if you look at the problems we have had, we have had ethical problems. we have had failures and leadership in business, government. we have individuals that have acted in a very on ethical fashion. we need to reenergize that ethical commitment.

purpose, reason, and self- esteem. as human beings, we are purpose directed entities. for organizations to be successful, the people and those organizations must step and the purpose of the organization. on the individual level, they describe their work as some kind of burden. if your work is just a burden, at your missing a lot of what life is about. this is it, this is not practice. if you want to the passion and energy, you have to have a sense of purpose in your work. i would argue that purpose is the cop -- the context is the

same for everybody in this room i believe that everybody in this room wants to make the world a better place to live. i think that is the characteristic of the vast majority of human beings. there are a lot of ways to make the world a better place. businesses make the world a better place to live. the primary difference between the quality of life in the united states and africa is that we had better businesses. businesses produce something before it can be given away. good attorneys, the doctors, good teachers make the world a better place to live. you need to believe that your aunt worked is making the world a better place to live. -- that your work is making the

world a better place to live. you need to make the world a better place to live doing something that you want to let -- doing something that you want to do. we had a fundamental right to your own life. if you try to make the world a better place doing something that you do not want to do, you will not do it very well. everything that is alive has a method to stay alive. we have the capacity to think. it is our only means of survival. no shortcuts, no free lunches. that is the way it is. i talk to employees about thinking. i do not know what role iq plays

in the thinking process. there are a lot of bright people that do a lot of destructive things. you can make a choice. you can choose to be as disciplined thinker, commit yourself to be a lifelong learner. in that context, commit yourself to that a very active mind. people that are lifelong learners have the capacity to become masters of what they do. that is what we need in a global look economy. people that have that commitment are affected at learning from a life experiences. we learn from our life experiences. it looked at people --

everybody in here can associate with learning from your mistakes. on the other hand, a lot of times we do not learn from our mistakes. we do them over and over again. we do not always learn from our mistakes. why don't we learn from our mistakes? we have to have the courage to admit that the psychological cause of the mistake. on fortunate, a lot of times, we invade. it is the ultimate psychological senate. -- sin. you refuse to examine it. you literally do not hear it. when you evade, you are detached from reality and bad things happen. one of the fail is the leader of that

business. things are going along fine. something happens in their business. it is more interesting, more dramatic. the higher acre could geniuses. they run their affordable housing. they said they would make less money. they juggle the citigroup around. i would argue must that i have seen it was made by highly intelligent people. the second thing is that life is a constant education.

i would go to the banks and have lunches. i never had a boring life. they were always asking me questions. we were always paying attention. you could see why they were successful. they were not in focus. a lot of people live their life out of focus. you cannot live your life. my observation for success is not that correlated. what i find in terms of success, they are much more likely to be successful. the most evil don't stay in focus. when you are clear but your focus, you raise your self- esteem. higher levels of organization, people that go to harvard law school -- if they fail, it is

because they have some subconscious low self-esteem issue that results in self- destructive behavior. you see that fairly often. self-esteem is the foundation for happiness. happiness is the end of the game. i do not mean having a good time on friday night. that is the ended the game. they think money is the end of the game. money is a good thing. happiness is the end of the game. self-esteem is the foundation. self-esteem is a complex subject. it is fundamental self confidence and ability to live in reality. you earn self-esteem by how you live your life.

nobody can give you self-esteem. the cannot give your children self-esteem. self-esteem has to be earned. live your life with integrity. forever by the in room, most will come from your work. it is very productive and hard- working. most will come from your work. this is what makes it work. it is real important that you do your job well. if you do not do your work the you you can possibly do it will lower a year self-esteem.

the flip is also true. do the work the best you can and you will raise your self-esteem. that is more important. you get more money. you get a promotion. that concept has huge subjects. take an entry-level construction. he has a tough, hard life. he gets there it. they raise their children. they have a successful life. the interesting thing is you get something very precious. he is to be proud of themselves. take the same bricklayer and give him more out there. he may be better off materially.

he gives off his pride and self- esteem. a lot of people are focused on security. the united states is not the land of this. they did not come to the united states to become secure. it is a land of opportunity to fail and try again. most importantly, this is the american sense of light. this is what is so precious. thank you very much. [applause] i would be glad to take questions. you think you're supposed to go up there. there is a brave soul.

>> you mentioned atlas shrugged it caught the country is pushed to the point of desperation before anything happened. so is the democratic side your people have you both for the changes. how do you view us making these changes without being pushed to that extreme? >> that is a really good and tough question. i am in the optimistic category.

he had the most of them occurred before the industrial revolution. brand had the advantage of seeing the power of individual freedom and productivity, which aristotle, for example, made the connection to. anything she is actually a breakthrough philosopher in that regard and i think her ideas can actually change people's mind. and i taxi people that free markets, most of them talk about aptos are found in.net. people can finally put it all together because we needed to giant intellectual mind to do it. bb&t it was mentioned earlier with 65 programs at major we have thousands tell us now i get it. now i get what we cannot have a free lunch. i am hoping they will be leaders.

a lot of people are committed to getting a free lunch. they do not want to do anything about social security and medicare. we have got to tell people the right ideas. the whole purpose of this is the bill of rights. this is how we drifted to where

we are. they are going back and looking at the incredible men in history. they come together at one time with the right ideas. they could do what they did. it was amazing. their goal was to limit the role of government. they got a pair -- they got it. compare the declaration dependents urging the declaration of independence compared to today -- compared the declaration of independence to today. as things get worse, maybe this time people will be there. >> i have a question about the structural about the method of

the government. it seems that part of the problem with long-term issues like social security and medicare and make some focus on the next election. but do you think there is a structural problem or a way to overcome that on the next election? >> i think the structure could be improved. this is what they wanted. also communication. they're making the terms longer. limiting it would structurally help. i think unfortunately we elected people we deserved. we elected people we deserved.

we have to change their ideas. there is a belief system that is being taught to our teachers that teach our students that has changed. life and the pursuit of happiness are not taught any more. everybody should get the same. all of those eyes are destructive ideas. >> thank you. how would you go about thinking about trying to predict if and when a catastrophic effect and the collapse of the dollar will happen. what preparations would you take in preparation of that? some things that come to my mind

are the total number of dollars that have been printed, outstanding obligations, and looking at how humans have reacted in previous situations in history where there has been a massive printing of a currency. what are your thoughts on all of that? >> that is a very critical question. i am more worried about it than i think a lot of our politicians are pureed the united states has the reserve currency. people would extend dollars the matter what. if we did not have the reserve currency, we would already be in economic disaster. we're so in debt, no telling where our interest rates would be. the fact that we have the reserve currency is a huge benefit. at some point, at the rest of

the world has confidence in dollar. this is just paper pictures of george washington. this is not functioning properly. a lot of people who are buying gold -- i am not recommending people buy gold -- when criticizing the rise in the price, it is confusing. if corn is going up, and there could be speculation. goldas people believing that paper currencies are getting ready to go. if they are all based on the government. they all made these commitments. .t is not just greece it is everybody by germany and maybe france. france's marginal. it will be interesting to see. they were speculating that paper

currencies are not holding up. i tend to think it will not happen in immediate future. i tended to think we've got 10 years in which will be go directly with determine it. i think the dog will collapse. when it collapses, there will be a lot of warning. when it happens, everybody will be stunned. i think we've probably got 10 years. every kid going in the wrong direction, we might have less. i do not think this is likely to happen.

i think we were direct, will not have to fix all of the problems. we would jump on any proposal. this was care which was a very the number of conservatives jumped on it. bernanke needs to wake up and realize it could happen. he is very naive. he has never been in business. we hope it will work out.

then one day it is over. the company is best. that is how we will go as a reserve currency. i do not think it will happen in next 10 years. >> a sense of pride and self- esteem seemed to depend on in comes. -- in comes a driving inflation. there are figures saying they are not. i am wondering what you see as the cause of that, if you think it is true. some people say it is globalization. some people say it is technology. some people say it is policy. what do you say are the causes?

>> is another series of important questions. there is another debate. it is not self evident to me. it is below the poverty line. what happened since 1999, they have gone up exponentially. misstating what is happening. i'd think the income negatives are all from this.

shouldn't have risen as fast as it should are there lots of things we are doing wrong and couldn't start down? i think it is going to starteb down if it hasn'tat already so i think there is a debate over what is already happen but where we are going if we don't change direct and is material globalization has raise our standard of living. we are buying goods in china that are cheaper and better. the labor raises our standard of living. if you have workers that are not trained to be competitive, that will be there. technology has raised their standard of living. in the quality of life. cell phones are a lot better. my grandmother had a nine party phone in her house.

technology has raise our standard of living. we have to be problems. we have a field education system. -- we have two big problems. we have a failed education system. without a high-school degree you have no prayer. a lot of people that graduate from high school cannot read and write. we cannot hire high school graduates that cannot speak english. it is now globalization. they're starting to work harder for a lot less.

we are competing. the smart people are always valuable. they are competing against people that are willing to work a lot harder for a lot less. i tell you. i for years tried to fix a public-school spirit i would argue republics school. i would argue it is run for the benefit of the bureaucrats. we have to privatize the education. we have to create incentives. businesses paid incentives. they cannot stop innovation.

the attack on microsoft was not initiated on the justice department and microsoft competitors. they get more money. we have to create an incentive for innovation. if you think about a market economy, what makes it work is a bunch of experiments. there are millions of experiments going on. most are failed. there are 10,000 failed bugles -- googles. he said the 999 that failed or the last ones that worked. when you take up the learning process when businesses cannot fail, you destroy creativity and innovation. if you look at our technology

has advanced and how little in education, the time has come. i do not know exactly what the answer is. there is a solution for low income kids. walmart is a classic example of a model that worked. it created a lot of jobs. we have a failed education system. it is not the highly educated partner. every employee will tell you they're trying to hire this. a lot of them came out of construction industry.

they do not want to except the compensation. there 50 years old in dublin to do it. -- do not want to do it. or they are minority teenagers that the school systems fail. it costs about $10 an hour. a lot of small businesses cannot afford to pay and skilled workers $10 an hour. -- unskilled workers $10 an hour. the fundamental one is a loss apply a in man. -- is a law that applies to man. it is a price that clears the market. some of the supply will not be used. if you went into the grocery store and look as $100 a gallon,

you probably would not buy it. if you raise the minimum wage, people go unemployed. if you raise the minimum wage, 40% are in face a bolt recession. he had to get entry-level jobs. small business cannot pay $10 an hour. this is policy. minimum wage is a policy issue. even with inflation, it is a lot less than minimum wage. i do what prison guards do now. i learned i do not want to do that job.

these are very valuable things. people have to get a job to get started. all these other policy things i just decided. it is a combination of a failed education system and failed policies. technology will probably help raise our standard of living. not necessarily create more jobs. >> there's a lot about regulation. what is the way forward? >> if i were in charge, i would say every regulatory agency had to regulate and the next six months and reduce it. i went to work in in 1970, we still have the regulations.

at least 3/4 was on necessary in united states. if they have staff, it will create work. then the staff has exploded. as trying to remember this number. we have added 65,000 regulations. reading the names of regulations, there is a wall that happen in the library of congress. it is full of books. we have a massive over regulatory structure.

in six months, in business we have to do it. we have to go back to ground zero. would you really do this if you're going from 0? which is at dawn. we never go back and visit anything. here. the role of government is free lance. we should not be involved in this. it is a terrible economic and human mistake. we needed a policeman to punish

the bad guys and put them in jail. what the porpoise -- purpose of the court system is more contracts. the contract lot israel. i am not an expert. it takes a lot of time. we could argue we do not need any regulations. i think they're really about enforcing contracts. there is room for regulatory structures that are in contrast. theoretically they do not have to be called regulation. making sure the contract is in forest will always get into the court system. by 75% will be more than making their read up. -- is more than we can get rid of.

anarchy is failed. i know some libertarians that are anarchists. there is an important role for government in protection of individual rights. it could commit fraud. we need good laws. we need in effective court system. there should not be this redistribution of wealth and deciding which energy is better than what. that is not what the government should be doing. >> thank you. i come from brazil. we are achieving quite success and economic development. government taxes reach people.

they say they're getting $100 per month. the of putting more people into the market and getting an extra 1% a year. did they say something about digging a hole? countries like china and brazil are following this lesson. we make a lot of public works. given that some are not necessary, we have a very good fiscal situation now. even today there meeting in

washington to decide how much money they are relaying to the union. >> i think brazil will have severe economic problems not far in the future. you state the history is a mecca less than the united states. i think brazil will not dwell long term. i do not know what you're talking about in china. china has basically two different economies. they have a privatized economy with tougher regulation. industries are having huge economic problems thing

subsidize by very successful private economies. it is much less regulated. the united states is much heavier. we have a welfare system, too. a lot of these things are bigger. we're coming out of a bigger economy. dollars are much higher. the thing that is smart was finally creating currency. it is one of the united states problems. we have been creating money like crazy.

that stabilizes the economic system. you have to look at the potential. brazil has phenomenon national resources. it is doing better. should it do better? yes. the brazilian structure is not any more difficult. i know a lot of companies that operate in in brazil. they get more subsidies from the brazilian government. i do not know that the government is more anti business. it is hard to make those kind of issues. the chinese i think all had big problems. they have demographic problems.

the way they spurred huge growth of in japan was by not having babies. babies are expensive. japan created an economic boom. they chose on their own not to have babies. then they are creating an economic bust because we do not have enough young people. china has government making decisions to have one baby per family. the of drastically reduced the number of babies. that has a short-term impact on the quality of life. these are expensive. they set up a lot of resources. the chinese, the reason they are saving so much is that they're not having babies. they want their money back. they are going to expect us to

pay them back. their savings rate is phenomenal. they do not have any babies. children cannot take care of you. they do not have the children to take care of this. this is why our debt will become a problem. we are their savings. their civilization of the currency picture all the stuff is harder to fill through. >> we have this since 1995.

there's money that goes directly against this. many in the united states, would that boost the economy?uch >> i think the united states has a much bigger welfare system than brazil has dramatically higher. that is one of the problems and someone asked that question earlier. s way above the poverty

line. >> the income here is there. >> you do not distribute money to the people at the level we're disturbed eating it at. it is a different -- distributing it at. >> i have not been very long time. >> if you bought insurance, you went. the united states health care is objectively the best in the world. that is a fact. one of our problems is we invested way too much as a

percentage of our gross national product in the medical care. we spend more than any of their country in the world. whether how productive that it is rather argumentative. we have the best medical system. the united states says of the medical research in things like pharmaceuticals and those kind of things. any hospital has to treat anybody that comes in. that is just the way it is. here is the answer is -- interesting thing. ed canada was socializin medicine, you'll get treatment for cancer be making the six months later and you will die. you get treated.

they come to united states. the cost is delaying the treatment. the united states has 10 times the technology in scene. we treat people very fast. we treat more people at in united states. whether that is good or bad, that is a different question. and maybe one of our economic problems. >> thank you so much. >> we are out of time. i think we can all appreciate this great speech. thank you so much for coming. [applause] thank you all for coming. we afford to seen at are few -- seeing you at our future events. [captioning performed by national captioning institute] [captions copyright national ..