kevin williamson is next on booktv. mr. williamson argues that the collapse of the modern welfare state in the u.s. presents an opportunity for market-dprifn alternative to be explored. it's about an hour twenty. >> good afternoon, everyone. i want to thank you for coming out, and to welcome you all to the auditorium at the cato institute. my name is michael tanner. i'm a senior fellow here at the cato institute. of course, i'm not the person you are really here to see. we are here, actually, to talk about new book by kevin williamson, "the end is near" it's going to be awesome. we have kevin, who will be talking to us a little bit and talking about the book in a few moments. we'll have some commentary on

that from nick of reason.com and reason tv. who will have a few things to say about it, i'm sure. if you look around right now, you can see pretty obviously, i think, that the major institution of the modern welfare state are beginning show their strains, let's say. after all, you look at the fact that we have, right now, at the federal level 126 separate federal antipoverty programs. they cost about $866 billion a year. and yet, poverty rates go up. we spend more every year on education, more federal education programs, more federal education dollars, and test scores go nowhere. we spend more money on social security and medicare as the

programs careen toward bankruptcy and social security delivers a much lower and declining rate of return to young people leaving them on the hook for higher taxes or lower benefits in the future. federal intervention in the health care system from medicaid to medicare to obamacare is leading to higher and health care costs, higher insurance premiums, more difficulty in seeing the doctor of your choice . i mean, all you have to do is look the most recent scandal who are suffering right here. the investigation of ben gas city and you take them at the word for everything you assume every administration has been telling the truth all along. you have to come the conclusion that the cia, the state

department, the irs, the justice department, and a host of other federal organizations are utterly incompetent. that the best news, the good news is that most of the federal government is incapable of organizing a two-car funeral. but kevin will actually tell us it's really good news because we're going broke at the same time. i mean, the fact is that this country, we talk about facing a $16.7 trillion national debt right now, which puts us only a slightly better position than countries like greece and italy, i think we have the fourth highest national debt among the countries. but, of course, that doesn't even begin to touch the real cost the country is facing when you get to unfunded liabilities like social security and medicare. my most optimistic forecast you

included unfunded liability of the program we face a real debt of somewhere around $80 trillion, with a t. and 500% of gdp and perhaps as much as 120 or $130 trillion in debt over 900% of gdp. even just using the regular national debt, of course, 103% of gdp. we owe more than the value of all the goods and services produced in this country over the course of a year. i mean, figure, you know, looking at the credit card bill and realizing they now add up to be more than your pretax salary. so what we're going hear today is just how close to the end those makes. and why they are good news. so with that, i would like to turn it over, if i can, to kevin williamson, who is national review correspondent is checker blog deals with issues like debt, deficit and the

intersection of finance and politics. i also have to say that he is a frequent editor of my own column for national region line. when i'm insufficiently assassinatingy i can expect him to add additional assassinating to the column. which is needed today. he has a long and distinguished journalism career. he started at boy bay end indian express newspaper group. he's fifteen years in the business he's an old fashioned niewp man. we are thrilled to have him here. you see him regularly on lots of television shows, the talking heads now no longer write newspaper. i guess that's the new way to do it. any rate "the end of year" social security going to be awesome. we are delighted to have you, kevin. [applause]

by old fashioned newspaper man it means that every newspaper i ever worked for has been through bankruptcy. none during the time i was there. so it's nice i was able to avoid nap thank you for coming out today. i appreciate it. i know, there are lot of other things to do with your time, and your afternoons than hear about the inevitability of politics. as i get started, john elliot is here. i should probably go ahead and blame john for this book. i was speaking at an ihs event a few years back, and i just had a offhand remarking at the end that when libertarians are asked difficult questionses about social changes, things like poverty and education and things about people who are disabled and simply can't take care of themselves, we always say, well, charity will take care of it.

the free market will take care of it. those are our two answers to everything. as if they are answers to a question. they're not. and job said, well, that's what you need to write a book about is what we go about doing. the book, in attempt, was in part an attempt answer john's challenge there. i will leave it to you all to decide whether that's been sufficient or not. so i make the number around $10 trillion, really. when i look at the situation, i also include the state and local debt and state and local unfunded liability as kind of the aggregate national fiscal overhang. if you wonder where why we use the -- it's because we uses phrases like that. which nobody gets. most is not in the form of explicit data. we have bonds at the state and local level and the national

level they have to be paid off one of the days. it's mostly the liabilities associated with the entitlement and also at the state and local level with pensions for state employees which turn out to be a huge, huge liability that most people don't think about too much. rubbing currently around $3 and $4 trillion in obligation for the state and city if they have no possible way to pay or even think about paying. i saw anest estimate in fifteen years, i want to say the state of illinois' pensions alone will exceed all of their expected tax revenue. if they close the schools, fire the police, let the highway fall apart, get rid of the zoning department, which could be great, and don't do anything but try to pay the pension they still won't be able to pate bill. [inaudible] >> pardon me? about fifteen years. it might have been two years ago

i wrote that. sometimes you forget. but we're not talking about things fifty years down the road or sixty years down the road. in california you already have city after city going bankrupt. i happen to be at the city council mean in san bernardino when they declared bankruptcy. if you had been there you would never see a happy -- they were the worst body of elected fishing i -- officials i have ever seen anywhere. it's a guy who spent time in pakistan. they are just terrible. but in the end, as i'm arguing in the book, i think this is an opportunity for us. i hate to take the rob rahm emanuel approach. i have spoken a lot about how we go about solving social problems to student groups and young people and i was the teacher

professor for awhile. and the sort of abstract economic arguments puzzled them. partly because they don't take economic anymore. if they take it they get taught advanced polite math rather than economics which is a different subject. there are things that they understand and things people un. one of the visual aids i always like that use in a recurring motif in my book is you remember this oliver stone new "wall street." greed is good. what i like is that famous poster of him using the cell phone from 1984. was -- because i'm an nerd i have an -- this is 40*9 anniversary of the cell phone call. it's been a mixed blessing. obviously in some ways. but, you know, the brick he had

cost almost $10,000. in 2013 dollars. it cost something like $1,000 a month to operate. had 40 minutes and you couldn't play angry birds, check a stock, or send a text or anything. you had to be gordon to own one. they were expensive. the first time it appeared in a american movie in "sixteen candle" it's in a royals rise. that's where they were. you talk to college students, you talk to people who are not gordon, who are not millionaires, and everyone has this in the pocket. there's a lady who runs a coffee shop down the street from my office in new york. she's an immigrant from beaning bangladesh she has the same cell phone from that the president has. you can bet everything that her

kids don't go schools that are as good like the president or retirement boant -- won't be as good. her health care won't be good or the health care financing. and access. we have the weird situation the jet son and flinstone thing. one of the goofy thing the idea you write a book and column. one everything is better and cheaper and better and cheaper. and the other one they don't. we have three important sector of the economy that are largely dominated by politics. there's a education, which is almost entirely the local monopoly 91% of students go to public schools, you have health care, which even before the aca was 50% government spending.

it was a half socialized system before we got around to making it a worst three quarter socialized system. then you have pensions. which is dominated by social security, of course, medicare is sort of a piece of that. if you look at retirement overall. and you have a system in which people are paying 12.5% of the income for the entire lives and getting something out of it that is not all related to what they put in to it. one of the worst debate we lost is the idea of social security is an investment. this country is full of people who believe there is a fund somewhere in to which their social security taxes go. and it's supposed to be the there waiting for them. and one of the great frauds ever perpetrated on the american people -- you try to explain to them that the social security trust fund is just sort of a figure of speech. you know, it's an accounting fiction, and you can tell them 100 times or a 100,000 times,

and it's really hard to get people appreciate that. it's not there. it's a sort of a thing that was made up. so we end up with a situation in which we have flee important part of the economy, and some other part ones too. these are the three that leap out that are dominated by system that don't work. and there's a tendency among those of us that write about politic and yell about people about politics all the time to read all of this through sort of familiar ideological filters. and i wanted to try to take the arguement to a little bit beyond how market work and government -- that's the end of the discussion. because i think there's a bit more to be said to it about it than that. because the question of why markets work is something that i think, not always well understood. most people think it's largely about profit and incentive. i don't think it tell the whole story. of course, being in the

auditorium there have been more sophisticated version of the argument made than mine. but not search going to be reading that. so we have a problem that is related to something hayek got got in to the problem with complexity. i start off the book with with a sort of retailing of -- essay "eye pencil" i read it when i was kid. it stuck with me. you have a process not only in the marketplace, but also in the non-profit sector things like wikipedia and kick start. lot of people working on problems from lot of different angle. everyone making small improvement. things that add up in the aggravate over a long period of time to real dramatic improvement and motorola brick to the iphone from $10,000 to we'll give you one for free if you sign up with the service.

iphones aren't free yet though? maybe a couple of hundred dollars? are they free? get four for free. who wants four? that's so six months ago. obviously the schools aren't improving at the same rate. they are not getting better and better and cheaper and cheaper. we are spending twice in real dollars per capita than what we spent on education thirty years ago. we're not getting twice the results. we would be lucky in most places if we are were getting the same results as thirty years ago. health care is one of the weird things you have a system paying for things which is disconnected from the market sinceth it. we have incredible things in the marketplace. simple little thing. it's basically a straw with medicine implanted in it. for a lot of people it's made open heart surgeon an

unnecessary think. they had to saw you open, do open hereto surgery. it was crazy. now we have outpatient freed your you're in and out. but your system of paying for that is, of course, what do you think 19th century? maybe early 20th serving i are? and it she is up throughout the marketplace. one of my -- one of the things that drives me crazy in life. one of the days i should write a long eases is a. go to a doctor's office. they hand you a clipboard and ask you medical questions and you fill out. a pen and paper for your medical records? if you owed them money, they use the credit reporting system which is a sophisticated piece of technology. they can find you anywhere in the world and discover how far you dwroa whom. when it come to the health records, it's tell me if you are allergy to anything. tell me this, that, you know, we're using technology that isaac newton had. we are one step up from a

quill. [laughter] it's crazy. this is, of course, what happens when you have a mark place in which there's no need for consumers and producers to negotiate with one another. everyone's interest are adverse to everyone's health. there no venue repeated relationship that make life easier everywhere else. so the thing about where we are with the money end of the situation is simply that these obligations are never going to be had. they're not. we have got, you know, again by account something like $140 trillion of liabilities and 0 to pay for them. if you ever try to talk to people about the national debt and things related to. when you say trillion people go -- numbers all sound alike at the certain point. i'm an english major. anything above 16, you know, i have a check twice. $100 billion, $1 trillion. it sounds the same. i was at the house speaking to a

couple of members of congress, and they have some level know the difference between $100 billion and $100 trillion. you won't necessarily know it to see how they operate. to give you a scale that have $140 trillion is about two times the gdp of the planet. it is approaching the value of all the financial asset in existence in the world. all the money in all the bank account, all the stock and bonds, everything. we're not only country with the liability. everyone going the same marketplace to take the limited pool of capital and finance that are a multiple of it. i don't know what the global number is. you have to use scientific nation and explain to me. it's going to be huge. there's just zero.zero percent

possibility they will going to be paid out like the present value. there's, of course, inflationary ways to do that. i actually am cautiously optimistic about what the process look like by why we inwind this. if i had to guess is what happens interest rates go back up, if they go back to the historical average that's a pentagon size hole. people have to start making difficult decisions about what it going to get financed and what is not. if you're in the house and the senate, the question you're asking yourself is in twenty years which howling mob do i want to face in the people expecting social security checks? or the people own bonds and expecting to get paid back? and social security is going to lose.

don't bet on grandma in particular showdown. politics on pay as you go basis. it's not very much fun. it you can't run deficit, if you can't give people something apparently for nothing. it becomes a hard game. i think the default on the actual debt of the country is unlikely outcome. we are not economically much like argentina or greece or any places. reform point of unrecognizability of the entitlement state, i think is a very likely outcome. hate to sound like a marxist almost historically inevitable. i'm a marxist libertarian in a sense, i suppose. the problem for us then, those thinking about the issues and sharing certain set of issues and want to address real social problem in a they is productive

and fruitful and does the things we adopt, we have to to be ready if not specific program attic solutions how here is how we want to take care of education and health care at least with some sense of intellectual guiding principles that allow the solutions to develop. one of the problems we run in to, we run to the restoryically as libertarians we hate social security and medicare and this. fine, what you adopt? the problem is that answering that question is part of the problem. the ideaa model of education or financing health care, or a model of about what to do with people's retirement is an enormous part of the problem. there's no one answer to any of this anymore there's one company that make cell phone or cars or one person editing wikipedia. it doesn't make any sense. so our argument going forward, i think, needs to be not so much

about program -- blarng what sort of political and economic environment will allow them to emerge. one in political science is exit. giving people the opportunity leave certain programs behind and experiment for themselves. and moving from a sort of cash flow base system dealing with the poor to an asset-base system you are actually making real investment on people who need it. rhetorically we have allowed ourself to be lead astray of the cartoon of what capitalism is. law of the jungle, competition is everything, every has been for himself kind of way looking at the world. i think it's back ward and not reflection of the value. i think we should come out and be talking about the sense we have a positive obligation to do

people to do things for people who can't do things for themselves. it's a real thing as human being. there are people who are children. we don't expect children to be responsible for them. people who are 85 and no longer able to do things. there are people who are disabled and unlucky. we're not going to let them starve in the street or be without health care. we will address the problem. i think we as libertarian should be a little bit more vocal about the fact we think these are problem and solve we think prove poverty is a problem been we have solutions that have a good chafns working. what is money; right? poverty rates are slightly higher right now than before we launch the the famous world poverty. at the point we spent $600 ,000

for every household that's been in poverty since the johnson administration. we scrolled written them a check for half a million dollars. every family that has been poor and they wouldn't be poor anymore. some of them probably would. if you give me $500 ,000 when i was 18 i would be broke. and worse off than i am. so i think we should not see the idea we view them as obligation and positive obligation as individuals. we have a possibility of human being to take care of things in a they is actually going -- the sort of thing they want to -- as i said i'm cautiously optimistic about this i think election results notwithstanding american are not stupid. they are stupid as voters. americans everywhere are

actually fairly smart people. we don't want to be poor or miserable. we understand that what we're doing and have been doing for the last forty, fifty, sixty years doesn't work. it's -- and left unchecked will lead us to some sort of economic crisis. and we look around and say what is the worst case scenario? argentina, greece, cypress? the truth is the worst case scenario is not price dented. you have never seen an economic crisis like in a country that accounts for one fifth to one-fourth of the world's economic output. no one has ever seen anything like that. nobody knows what it will look like. it's probably something you don't want to discover. it's not going to be happy if we let them get to the point. i still sort of don't think they will. i think as the financial crisis pressure builds on washington, they will dot right thing once they exhausted every other

option. the good news they are run out option and up to us to be there with better ones. >> with that i'll bring nick to the conversation. they put it between us keep us from, you know, having two -- >> thank you. [applause] i want to invite nick. we asked him on an affirmative action program for hair. [laughter] as part of this. come up and have a remarking. he's the editor in chief the reason tv after spending years as editor in chief as reason magazine and another person moving away from the old fashioned print i'm not sure what it means in term of our future. you have seen him on tv. he's in all the major print media writing columns and what

have you. we see a lot of him. he's one of the old time hands in the libertarian vineyards. been laboring far long time. that may give him a unique perspective on this. so knick. >> thank you.. i kind of shy away from the emphasis you were putting on old hands. [laughter] such as it is, i am actually celebrating my 20th year in october with reason. i thought that was going to be like a year and a half job, and so time has changed. i want to thank everybody for coming, and a couple of people in particular cato, of course for hosting this. but michael, it's a pleasure to be on a panel with you. i have use your work through the years to my advantage, i hope to public discourse advantage. i think it was michael's work, actually that made me fully understand how bad a deal social security was for anybody under the age of about 70. [laughter] and it keeps getting worse and

worse. and i also want to thank kevin for inviting me to discuss the book. i told him his book, i'm a fan of the work. ic this is an important book he's written. i'm going pick some, you know, pick some knit with it so we can have a discussion and whatnot. i don't want that to get a way. when i was reading this book, it sort of coming back to me, when i became the editor in chief of reason, i was trying out different line to talk about what is a new libertarianism? move the ball forward, change things, and i come -- because i'm obsessed with cold war history and, you know, the leader of czech in the 19 60s, i'm going present socialism with a human face and obviously that didn't work out very well. it ended with soviet tanks parking in prague. i'm going to show capitalism with a human face. that's what libertarianism is about.

that didn't go over well. i was thinking about that during the reading kevin's book. it's a great way of talking about capitalism. he gets to the value proposition that a system of voluntary mutual consent innovation change and whatnot actually increases everybody's life chances and makes everybody better off. it's a powerful message we get lost in especially in d.c. we talk about politic, policy, and worst of all parties. ..

kevin's two main points are both inarguable and totally convincing in their first that our current form of government and politics is simply unsustainable and it's unstable and that is a good thing. we are definitely going broke. you hear people at "the new york times" or most of them, you hear people like paul krugman talking about this in the nation you name it that we are not going broke. the fact of the matter is that we are going broke in a very clear unambiguous way. i believe very least we will be facing such tight constraints going forward on government business that things have to change. we have run out of -- a couple of months ago. she was famous for saying when you run out of people's money things change and that's the problem with socialism.

just a very concrete example talking about social security and i will have more to say about that later but absent major changes to the tax rates that are charged or to benefit cut social security surplus trust fund will be totally exhausted by 2033 and that is what they say now. it will get closer to us as time goes on and that will mean an immediate cut of at least 25% and retirement benefits. similar issues are therefore medicare and the other major things with exhaustion dates that are closer to us. and then all of this is predicated upon dcn budgeting circles and interest rates that are effectively zero or one or 2% range for government money is going to stay that way for a while. in brigadoon here we are living a fantasy world and this bubble is going to pop pretty soon so the minute that the cost of borrowing money from the government will eventually, all

of this will happen much more quickly but the thing -- so we are definitely going broke. and that's a good thing. that is kind of the second half of the book. it's going to be awesome and i think he's right to cozen these kinds of moments many things can happen. second, he is correct and he is appealing and optimistic i think in a correct way that the end of business as usual you know it's going to be bad news for a lot of people. it's going to be bad news for politicians and for cronies and it's going to be bad news especially for people who are dependent on the government. one of the things that is interesting about his book this book is it's not the usual suspects and his previous broadside for the dependency agenda is brilliant on this point. the real people who are dependent on government, it's not for people that are the problem. it's middle-class and upper-middle-class people and we

live in a society where about 49% of americans live in a household that gets a direct payment from the government. which helps explain both why the nation is going broke. we are paying money to everybody one way or another and also why large numbers of people are so resistant to change. change will come because that pipeline is going to run dry pretty soon. but his point is that what is bad for the ruling class and for the kind of sponging class, he does not use that term, it can be great for the rest of us. the serfs are going to be set free when suddenly a revolution comes and it's going to be a financial revolution and he makes a compelling case that the world that we can create in the midst of this chaos will be ultimately predicated on things like choice consent and voluntary exchange. he uses all sorts of compelling examples from the commercial world as well as the social world. things like religious

institutions and benevolent societies and whatnot from history as well as things that are going up now. the vision of a better world and you said it in your original comments. y. our phones getting better and better and cheaper and cheaper and then do things the government controls are going wrong? it's not an accident and is not going to change anytime soon because government functions by radically different rules which include force and coercion first and foremost. so far so good. i am in total agreement. a joke which i don't suspect is going over to go over well. i like big buts. i want to raise objections here. the first is at one point kevin asserts and again this is a richly textured book that is about human life as we live it and how the government is totally different piece.

education and health care pensions. i would be remiss if i didn't mention the book that matt welch and i co-authored a couple of years ago which is available in paperback the declaration of independence and we come to similar focus on education, health care and pensions. these are the places where life is not getting better even though we are spending more and more money and in most places we where spending less money and getting more stuff. the reverse is happening. you also do great work by citing arnold clay and who is an adjunct scholar at cato and works with arkedis. he has written a series of three books that focus on these issues. this is just the way it is. government is screwing things up but kevin at one point asserts that politics, not only is politics violence but that the department of education is bureaucrats and other law -- are gangsters and he actually uses

those terms. i want to pause on that. there's a lot to agree with that in such an assertion and certainly it's a great laugh line by kevin quotes the famous scene from the godfather in which michael corleone of the major mafia family and his wife who is a kindergarten teacher in a stand-in for nonethnic american that is stupid and diluted because they have never been abused by government forces area she says, on, senators and presidents and politicians don't kill people. it's like come come on kate, who's being naïve now? this is the vision of government that is undergirding a lot of -- that politics is violence. without blinding ourselves to the realities of tyrannical government, the tyrannical government which are all on line at reason.com.

you can subscribe to the magazine that cato exposes the stuff and "national review" does exemplary work in us. do we really deep down believe that? do we believe that government is violence and that sits? if that's true what i want to argue, let me put it this way. from the most radical narco-capitalist that cato may have hidden in the basement or area in the foundation of this beautiful new building or an extreme narco-who is -- that would need a strong statement. coming from someone working at "national review" that is a really bold statement i think. the only other statement in the book that comes close to equaling that is kevin defends a passing or he celebrates led zeppelin throughout the book in particular the song stairway to heaven. i was puzzling over that because

it's a known fact that at least three of the four members of led zeppelin signed a deal with the devil so they committed their souls to satan but more importantly bill buckley founder of "national review" hated the beatles. he called them unconscionably awful and irredeemably terrible and now we have a "national review" writer talking about led zeppelin and the stairway to heaven. listen to it backwards and you will be going to hell. but that is to the side. do we really believe that all government is illegitimate ultimately because it's predicated, the world we live in is predicated by violence. in the end bad people with guns take things away. i'm not necessarily disagreeing with that but if that is the starting point are we not in open default? so that is my first of questioning in the book and politics is violence.

what sort of government is possible and to his credit kevin does discuss this a bit in the last couple of chapters which are particularly worth reading. is it a night watchman state and kevin at least one point is illegitimate and thus worthy of rebellion. the second i want to raise is this. kevin has a vision of politics and one of the reasons why we have the world we live in is because we are still trapped in a kind of hobbesian nightmare scenario where there are only two possible solutions to what goes on in the world. on the one hand the hobbesian state of nature is all against all and its chaos and people are killing each other or there's leviathan and that is what hobbs proposes as an alternative to it which is where the state leader is the embodiment. we all form the body politic literally and the ruler is, with

a follow his rules. the state owns us and directs us what to do. he is right in saying part of what he is trying to do in the book i think anyways to replace that kind of productive diad. these are you two options and you can call them republican and democrat or whatever but it's an incredibly constrained vision of human society knees trying to replace that. but, he wants to replace it with a new model of negotiation and voluntary consent. his emphasis on the right of exit throughout the book, i was just reading there is a brilliant essay. i forget where it actually appeared about albert hirschman the economist who died not long go who wrote a book called exit force of loyalty, by far and away the most important rights we have been preexisted things like freedom of expression or freedom of religion or freedom of assembly. i think it's great they focus on

that. he is trying to replace the hobbesian view or part of leviathan to be a part or get killed or in a war all against all with the negotiation of voluntary consent. if that is so and now i want to ask him his comments to comment on his recent theatergoing escapade which is made a lot of headlines. i don't know how many of you are familiar with this but kevin wrote up in "national review" while attending a play recently in new york city he was bothered by the theatergoer who wouldn't stop using her cell phone and it disrupted the play and just as a sidenote the couple of weeks ago i saw allen cummings and macbeth on broadway. it's a one-man show which i'm warning you i didn't know about going in. i found it terrible to be quite honest but there were people all around me and i have to admit i don't have full knowledge of my

time spent. we were all falling asleep. i don't know if that engendered rage. so, this woman is using her cell phone in a disruptive manner and we have all been in these kinds of situations. ivan osorio has been sending me secret hand signals and being disruptive over there. he asked his companion to talk to the management or his companion went to the enhancement and telling me if i'm getting the main facts wrong. the management basically didn't do anything so continued by which point kevin by his own account grabbed the phone and check it across the room and apparently breaking it? >> yeah. >> for his action and this is interesting. for this action he was lauded as a hero. that word by conservative writer wrong who pay his court costs and i would hold onto that if it comes to that.

the reason i bring this up is in this context of his government always for someone someone of the rules we live by? was an alternative vision of a society that is not top-down coercively based and what kind of world do we live in? what is kevin's argument for such an action and how does a bear in the book's arguments? your book turns on invocation of nonaggression of mutual consent. that is the alternative to a leviathan and state which we are living in or moving more and more towards. personally i can imagine a scenario under which kevin has the right to physically a cost or per take the property of somebody else in that context or destroy the property. it seems to me that your beef is really with the manager, with the theater management and the right move is your right of exit and getting a refund because they felt a -- on our contract to be able to watch the play which he said was very good.

doesn't his action action would provoke exactly the sort of scenario that his book seeks to replace that we either have absolute law or absolute chaos? which leads me to a final point and then i will end. as i noted before i think kevin is broadly writing very appealing in his book which is not only a stimulating essay but all of us who read on a regular basis and especially for living, when you get a book and you want to read it, it turns into liner notes from bob dylan. where are the needles and -- and this is a well-written book and very stimulating book and i urge you if you don't read rated at least buy a copy. it's worth it. [laughter] one of the ways in which change curse of beyond bankruptcy, you know the money runs dry.

what is the message, what is your message specifically to conservative readers and it's not that you are conservative or whatever but to "national review" leaders people who consider themselves republicans and conservatives, because it seems like that is who the book is speaking to. because it seems to me that many conservatives like liberals share a fuhrer of unstructured unplanned unregulated human interaction. libertarians by and large don't. i think we understand the spontaneous order spending order and all that kind of stuff and we live it. we dig it. we get the phone analogies and things like that but actually conservatives and right-wingers in general don't. they are afraid of mexicans crossing the border and afraid of affecting our schools and boy scouts in all of this type of stuff and when it comes to the major drivers of debt and i will end with this, defense spending,

medicare and social security, not only wasteful money but destroys capital. social security is not just an inefficient program, it's totally immoral and unethical on my part. but it's conservatives. they start wetting their pants when you say hey you know what, let's cut the defense spending to that which is necessary to protect the borders of the country as opposed to screw up every company we can land a plane in. they are the ones -- the aei went ballistic. the guy who used to work at cato is a great scholar, he was all hot and bothered about obama suggesting chained cpi for social security benefits? you have got to be kidding me. that's a no-brainer if you're going to stay within the the constructs of that in medicare the last time i checked the republican party and the presidential candidate was running on a platform to say he was against the here because he was going to make sure nothing changed in medicare.

medicare is a problem. obamacare will be the problem in six months or six years or whenever they get around to rolling out the first exchange but medicare is the problem now. how do you teach this gospel autumn up happy libertarian creativity and all of that to conservatives and i will leave it at that. thank you very much. [applause] >> cabin if you would like to take five minutes or so and respond to all those points real fast enough and will take audience questions. >> i knew i wasn't going to get away without talking about that cell phone. you know what i've been reading before that was telling since great essay on -- and i don't know if you read this essay but he does a thought experiment with his essays about potential property conflicts between ranchers and farmers.

cattle tend to wander around and things like that and his idea was that a relatively low transaction cost that people could cause this themselves and property rights would essentially be respected and distributed in a way that made sense. even if people were acting outside the law. ellingson went to shasta county california and actually found out how people did it and this is really interesting essay he wrote. people almost never sue each other. there is lots of property damage but people are able to solve these disputes themselves. sometimes they do it by breaking the law. for instance if someone's animal wanders onto your land you take it back to the owner and he generally will make good for any damages done to your funds or what not but if it happens a couple of times where the guy doesn't keep up, they kill it or there is property damage. i think i was doing an experiment right here so we

think of the theater management as the government and as a libertarian maybe we were not asking permission to solve our problems. >> which is kind of where i would like to go. in terms of conservatives and republicans specifically one of the things that i try to emphasize in the "national review" and try to keep foremost on everyone's mind is the key in critical important difference between the conservative movement and the republican party. you know i used to be a republican and i left the party, it wasn't that long ago. it was maybe 2003 or something like that over the issue of spending primarily. you remember the last time we had a unified republican party with bush, delay and hastert in

those characters. it was not exactly the outcome that fiscal conservatives were hoping for. i think the unfortunate fact is with the exception of a few really philosophically driven officeholders in relatively safe seats that there is very little hope for getting a republican party that will behave any differently than anyone else in congress will because their incentives are the same and people respond to incentives. they will follow their own self-interest as we all know from having read our public choice books. it's kind of weird where i am politically because i am very conservative including being socially conservative. my views are about what you would expect. i have some questions about how much debt we can make politically actionable. one of the things that drives me crazy in this debate about marriage in the conservative

movement and the question of whether we should extend certain legal marriage benefits to same-sex couples. you hear people like my colleague maggie gallagher who i like very much talking about we are just going to lose the institution of marriage. where have you been since the 1960s? regardless of how you feel about it i am very much a traditionalist on my views on marriage. we kind of lost that one and we lost that back in the days of no-fault divorce and all the rest of the stuff that came after it. i take a contract oriented view. i think people should be a will to enter into whatever contract they like including ones that are really finding. the argument in the deal i take to my fellow conservatives is this. we can have a sort of voluntary contract rights-based regime or we can have something in which the government line -- defines everything for us in washington will decide what a marriage is an austin in sacramento all will

decide what a marriage is. from a purely pragmatic view you have got to have -- or you are going to lose. what i think is interesting is i would like social conservatives to put their opinions to a market test so if we really believe that social arrangements we believed then and family arrangements we believe and will produce outcomes that are desirable in a measurable kind of way, happier people and more prosperous people and more stable communities and things like that than that should show up. giving people a choice, there should be a way to look at outcomes of one of the things i talked about for instance with self-insurance. self-insurance used to be a really big thing in the united states in the 19th century and early 20th century largely the blogging system. people belongs to fraternities in high numbers. one third of the country were

masons at one point and particular true that the minorities. in philadelphia in the late 1930 -- 20 century many american households had a health insurance. x dollars of per member for doctors in exchange for making house calls in patients being able to make doctors visits. it's a good deal for anybody because young doctors just out of school didn't have to take 10 years to build a practice in people who didn't have a lot of money to get some level of health insurance. there was a great deal of self-policing involved in that too is if your insurance company is also your neighbor that you go to church with them people you work with you have got strong incentives not to abuse them, to commit fraud and various other things and on their side they have strong incentives to be decent as well. of course the american medical association helped kill that by

appending the system in various government and regular tour initiatives helps in that as well. now we have this weird system where somebody else pays and someone receives an and someone produces that no one has any sort of relationship with one another that makes any sense. but if you were going back and doing something like that if you were a social conservative it would need an interesting opportunity to test out our social theories about whether they are actually true. you know, coca-cola has a really good health care system for its employees. they are very happy with it. in fact remember reading something where they ranked their health care system, their health probe and more highly than they did the managing of their company which maybe is not a surprise anyway but the reason of course they got good outcomes is because there are 110,000 of them or something like that. no one wants to be a guide to lose that account. when you have that big of a share then you have real incentives to produce for it.

there are billions of catholics in the country and millions of jewish and 600,000 people belong to the model railroad association, something like that. these groups can't self-insure the way we used to. i think that would be one interesting spare mental outcome. we may be totally wrong. maybe the optimal social situation as something other than what traditionalist conservatives think. even if we are right about that, it's certainly the sort of proposition that you might like to test. so i think maybe that answers nick. this is a totally cheap attempt to sell books by zep one which is something very popular as misfits. >> can i ask among your regular

readers from the right, what is the attitude towards things like making radical changes to medicare and social security? these are real sticking points. >> like you said we just went through an election campaign in which the centerpiece of mitt romney and paul ryan's objections to obamacare was that they were cutting $760 billion from medicaid to as the president responded and said i would never cut that. i said medicare is $42 million in debt. i wish someone would cut it. >> in terms of movement conservatives radical change to the entitlement programs, in terms of elected officials in the republicrepublic an and the republican party not so much. there are people who want to do social security arm because that's an easy one, because you can make a lot more stable with

relatively modest changes in a cant really the can't really do that with medicare. nobody wants to talk about it he goes it's too harder problem to solve. the other thing you hit had him was defense spending and that is a hard sell to conservatives. there are conservatives who just, there is no amount of money that is too much to spend on defense. there are some on the left who would say we are spending on education. whatever axe is, five times that. we kind of feel the same way about defense. i don't myself feel that way. i think we could cut the dod budget in half would be a good start, maybe more than that. that is both -- >> is that growing in popularity , having that discussion? one of the things i was thinking about just the other day among the republican party on the right the republican party and the conservative movement and the writer not exactly the same any more than the democrats and

the left are but at at least among republicans because of people like rand paul and justin to mosh and a number of others that the republicans are actually involved in a really robust and interesting debate and i was just talking with somebody who said they were doing polling where they asked people, who are the young leaders of the republican party and people would list these people often throw in marco rubio and ted cruz and nicky haley and the young leaders of the democrats and it's crickets. hillary clinton is the youngest democrat who anybody can name and she is six or 700 years old at this point. i don't say that as an ageist. i'm just saying she's getting up there so at least the republicans are debating this type of stuff. is there a sense that these heritage proposals, 4% for peace like ben & jerry's or 4% for war, ben & jerry's are 1% for peace. is that popular? >> yeah that's true.

>> we are having this debate. rand paul is probably the most prominent spokesman for reasonable defense and foreign-policy. we have had people like ted cruz. he is not as far out there as a rand paul his buddies also not where george w. bush was. i think there are at least a few of us who think that maybe oah was the election to lose simply because president mccain while he probably wouldn't have been as bad on things like health care and probably would have appointed rector judges from our point of view, iran, you know? is their place we would not be at war? it might be a bit much. i think there is an argument to be made.

it's an evangelizing argument for conservatives. not on a moral basis. you know what's funny for a conservative guy to be saying is that one of the points i try to make in the book is that i really want to just draw moral and ethical and metaphysical arguments. not that it don't think they are important. i think there are very important and fundamentally important but it's impossible to change peoples people's minds on the subject and we could have an ethical debate about the role of government for 1000 years or more and we are not changing a lot of minds. but there are some really good consequentialist and pragmatic arguments to be made on that front. i think we take those arguments to some people on the right and say okay maybe we do need to spend x, y and z on the military maybe every now and then a particular situation comes up that we want to be prepared for and maybe -- i can see that argument but what was the interest in iraq in

retrospect? we have troops in africa right now which confuses me. we have these people in the congo and belgium all of a sudden. when you're in the congo that is the end for you. that's a bad sign for your country. >> it is a european problem. >> we could have an argument on that whether it's in the national interest. the thing i think people forget and i will close with this is the issue of opportunity cost on that which is there are some things we want government to do and there are things they want to do that n. even when, if you were to drop a bomb on someone for good reason from a capital point of view it's a net loss. that's a million dollar piece of equipment. its only product is dead arabs. >> and the occasional american. >> more of them, yeah.

>> that is a discussion and one that i will obviously be having later today. a plots go. >> lets get you folks involved in this. we have time for a few questions so i don't we go ahead. please stand up. might -- wait for for the microphone to return them identify yourself and please ask a question and don't make a speech. i will cut you off on that. go ahead, right here. >> is a really short speech. this is blue with the american spectator and kevin i'm a huge fan and i like the writing have done about health care in crisis and how those two things don't belong in the same sentence. my question is and this is going to sound a little conspiratorial but you are very optimistic that when the end is come and it is going to be awesome and we are going to be able to step in as libertarians and you know make

some beautiful new thing that is voluntary. i am fully on board with that ideal, don't get me wrong. it's a huge question i think about a lot but i mean the history of events like this for all the fundamentalist institutions break down that tends to predate totalitarianism. i mean it's not like society collapses and then all of a sudden everyone is like really really free. it usually goes in the opposite direction so what do you have to say about that? >> i would challenge the premises of your question which is that i don't think that the state really represents the fundamental institutions of our society. they don't make anything useful. they do some useful things. i am not saying that law enforcement is good for nothing and courts are good for nothing and if you have ever entered into a place that has bad law or

unreliable courts or police that are worse than our police are you see the value of that. but the things that really make modern 21st century life where it is our independent of the state so i'm not expecting a total collapse of the government. i am also not saying that i don't have some ammunition boxed up just in case and maps of walking trails in northern maine. we have got to go away for a while and although i don't expect to have to use those. what we are really talking about are things here like are we going to have monopolies and are we going to have social security, are we going to have medicare? those are the things that are going to go away i think and -- festival funded by the federal government. as much fun as those things are

they don't add up to much in terms of the budget. all the non-defense discretionary spending is around 19% in the budget, something like that? 17? i can't keep up with the news i'll tell you. it moves too quickly. other than going through somalia route with the utter collapse of society and all this sort of stuff i would be getting my swiss german thing and looking for apartments insert but i don't think that is very likely where we are going because we are dependent -- not as dependent on the welfare state and certainly not as pennon on government as washington would like us to think we are. a lot of the stuff would go away the day after tomorrow my foot go on just fine. if it goes away in a slow and controlled fashion and will be less disruptive and i think there's a really good chance we can still make that happen. it's not a 100% chance though

i've like to emphasize. congress and the bureaucracies are certainly capable of making this problem bad and disruptive and causing a great deal of social disorder if they choose to go that direction. >> on my own behalf, isn't there a risk that that let's say obamacare collapses. isn't there a risk that the economic disruptions if you have low information voters and statist officials they might say well this means we have to start taking over industries and stay more and more involved not this crony capitalism but moving closer to socialism. how do you deal with that real risk? >> i think it's a risk. i don't think it's that large of a risk actually.

so the people can vote for members of congress who then vote to borrow money and keep doing things the way we are doing it but at some point they hit economic reality which is people don't want to lend the money anymore at least not at 1.1% or 1.2% or wherever we are so we have these debates every six months about the statutory debt ceiling but there is a real debt ceiling too. there is a legal debt ceiling that really doesn't matter and economic debt ceiling which doesn't eventually -- people can both for keeping things the way they are vote for doing x, y and z but once the assets and resources aren't there they just aren't there. so the people of greece would like to vote for something other than what they are going to get over the next few years in cyprus and argentina and various other places as well but they are not going to get it. it's not there. >> i would also add in a

complementary way to that process many of the technologies and the kind of new social organizations that kevin talks about in his book they empower a different type of political response and i think would say the obamacare exchange, their own people are calling them train wrecks and hindenburg and all that type of stuff. when those fail it's not going to be simple for the government. they might try to say okay now we have to go to a single-payer system but the same kind of ad hoc kind of temporary coalitions of a broad group of people can come together and organize to put down legislation. i think we saw that with the stop on line piracy act a year and half or so and pipa and things like that and you see odd coalitions that come together for specific purposes for short periods of time in places like california and places by colorado and washington in terms of medical marijuana or other

types of things. the technology that has made our lives standard has allowed that kind of action to happen in a way that it couldn't really 20 years ago. >> one thing we haven't gotten into too much that i would add to that is partly its technology and partly it's the changing nature of things like subsidies and the emergence of more alternatives for private and secure banking and things like that. 25 years from now i have my doubts whether the government is going to be a list do a good job of collecting taxes much less trying to manage their health care system. i think the balance in power has definitely shifted in an important way and it's not going to go back. we spent 20 years talking about gun control and what we should do. should we do this and should we do that? then there is a guy with a 3-d printer and is not what should

you do but what can you do? pass all the laws you want your not going to stop this. i think that's going to be an important political factor moving forward. >> kevin let me ask you this. so much of your argument here is based on this idea that which cannot go on forever will eventually stop and we have a debt problem and we will force action on this. the counter argument to that is paul krugman who essentially suggests, we don't have a debt problem. we can spend money infinitely and in fact the real problem is that we are not spending enough and the harsh austerity in europe where somehow to slash spending and assume there is less spending is what is causing the problem. how do you respond to that? there really is no financial debt problem. >> well that is the theory. i am willing to see that theory tested. >> if i can add to that your right obviously that there has

been -- austerity is the most quick we termed as a specific attempt to reduce the debt to gdp ratio. there have been attempts to do that in europe but they are fundamentally and overwhelmingly are done through tax increases. so they are not cutting spending but they are cutting disposal income. in the united states it's fascinating because it's clear obama wants to spend more money. he just put out a budget plan to increase spending by $2 trillion over a 10 year period and increase spending for next year quite a bit. under obama when you adjust for inflation spending has been flat and going down since his first year where he got everything he wanted. we know republicans want to spend money when they can and they haven't been able to increase spending so regardless we are in a place where spending has maxed out. at least temporarily.

>> hi i'm christopher. my question is, a lot of the sort of site guys in the media is predicated on the fear of what will happen now if we act to the other beneficiaries and what libertarians are talking about is what is going to happen 20 years down the line? that argument of fear resonates here in the now than in the future. what do you think we can do to highlight the benefits of it now acting as opposed to talking about what is negative in the future? >> the downside of that is there aren't a whole lot of benefits right now. we just have a problem and it's got to be sorted out but it's not going to be very much fun for anybody. politically there is not a lot of traction to be gained from

it. economically there will be downsized to that as well. people making plans for their lives based on assumptions about what their social security and medicare benefits were going to look like. it's not going to be a fun the unwinding in any way. one of the things that i think we should try to do is emphasize the things that we want to put in place for these things. whether that has to do with well organized voluntary wealth transfers or certain kinds of poverty problems and disabilities and things like that. certain kinds of policies relating to taking people out of the traditional education system. allowing people to setup self-insurance cooperatives and other sorts of health care alternatives. it's not that we don't have any good ideas and is not that we don't have things that we could start doing right now that would reduce real social benefits and

not less economic benefits but making people's lives better in meaningful ways. but as for the first part of that equation how do we undo this horrible thing that the federal government and the state and city governments in the in the end the counties and school boards and special district and every other political entity you can think of have done, it's just not going to be any fun doing that. >> i would like to add to that. i think it's a really difficult question to answer but the first thing we need to do especially, defense is not hard to cut and historically defense spending gets caught a lot. they got caught a lot after world war ii and after korea and vietnam and the cold war ended. that can happen and there's not a lot of dislocation. a couple of contractors get thrown out of work for while but things come back. with the other major players and drivers of government debt, medicare and social security we

need to start talking realistically about what position seniors are in. seniors not poor. these are programs that were designed or went on line, social security during the depression. medicare was explicitly talked about the final act of the new deal with people like harry truman and lbj. old people are not poor people and we need to sever that kind of mental connection start talking about the reality. to be honest you look like you are under 60. you have got to build up some generational warfare. your parents spend a lot of time tilting into certain behaviors and it's time for younger people and wealthy seniors who know they don't have a right through their children's future which is what they are doing through federal programs, you have got to step up mom and dad. i am sure there are wonderful people and erase the one for child but we need to start having this conversation and another thing i will add.

it's up on line at -- and one of the things are as fascinating as most of us in this room understand it i think i understand it although like kevin i was an english major so i'm not certain about this. we understand that social security is a form of a ponzi scheme and is kevin points out happily in his book ponzi schemes are all in. where social security is not. most people in america don't get it especially young people and in this recent poll in its latest iteration we found that out. most people think it's a retirement account but then when you explain to them what it actually is and then you ask what do you think about this option or that option there's a huge appetite, majority appetite for reforming and addressing it. there are still a lot of its it's occasional missteps of this kind of horrible program that needs to get out.

>> we are standing between you guys enough food so i'm going to take one last question. we will take us short question and get a short answer and then we can go eat up. -- eat. >> i am matt from ihs. something that nick gillespie said there seems to be maxing out at spending and something we remember from the book is when we tend to max out spending the urge to to legislate it appears another way sometimes and regulation and so you hit a ceiling of spending and overflowing to regulation. i was wondering if there is going to be in and do you also see is similar and an array qatari state or do you think that in the middle ages you don't have to be very rich in order to control peoples lives. >> i want both of you to take this. >> i will quickly. yeah, you do shed light on why we have had so much regulation

going through starting under bush but also if we are tacked on spending regulation is coming but as kevin was pointing out the 3-d printer of the gun, the 3-d printing of the gun is great both because of what it says about guns but more importantly it's over. it's not the end but it is over for the traditional power relationship between government and the governed. in a broadway there will be more regulations in and more ways to escape more regulation i think. >> let me take the last one. >> i would answer that by saying constraints on resources that limit what government can do for us also limit what government can do to us. it takes money to regulate and two police people and it's gone. so i think it's not yet safe to start ignoring the government. we have to keep an eye on it still and kick it in the shins when we get a chance but i would

not be at all surprised. i mean we are still going to have corruption and we are still going to have abuses but if you have a government that is he a big yea big versus a government that is a big it matters a lot less. if we had a federal government that account to one to 2% of gdp i would be a full-time -- i would not bother about them but they are where they are so we have to deal with them. >> i want to thank you all for coming. we are going to have lunch upstairs. kevin will stick around and sign copies of his book. the title again is "the end is near and it's going to be awesome." the other panel with you guys is a real thrill. thank you all for coming. we appreciate it very much. [applause] >> thank you, all. we look forward to seeing you again at the cato institute. thank you.

>> what are you reading this summer? otp wants to know. >> this summer andrew billingsley's book yearning to breathe free which is a book that i was asked to have written

a forward for. it's about the life and legacy of robert smalls. robert smalls was worn in south carolina deep in south carolina in 1839, born a slave. he died in 1915. now the reason i'm spending time on this book, and i've given to lectures on it is because i see what is happening today here in the country, the supreme court decisions, legislation at the federal and state levels, as being somewhat reminiscent of what happened during the life of robert smalls. robert smalls after gaining his

freedom by delivering the -- and cohorts and family members took their confederacy to the union forces. and he was granted his freedom and given cash for it. he took that cash and with his freedom developed a significant will. and he became a delegate to the 1866 constitutional convention in south carolina that codified for the state those freedoms

that had they been granted former slaves but the emancipation proclamation that went into effect in the teen 63. robert smalls at that time after getting his freedom at that convention became a member of congress and spend five terms in congress. he was one of the eight african-americans serving in south carolina before i was elected in 1992. now, smalls was also a delegate to the state constitutional convention of 1895. in 1895 all of those rights and privileges that had been given

at the constitutional convention of 1866 were all taken away. the constitutional convention of 1895. if you look at what was taking place between 1866 and i guess i was 1876 because it was the 1876 presidential election that created the opportunity and the atmosphere that led to the ending of reconstruction and which eventually led to the creation of jim crow-ism and what i often call apartheid in the southern part of the united states of america. and now, so if you look at what was going on from 1876 up until

1895 in that twenty-year period, we saw the beginning of the end of full citizenship for african-americans in this country. so by the time robert smalls died in 1915, he died a broken-hearted and financially not near as well off as he once was. and so i have been spending a lot of time with groups talking about the history of this. as i used to say to my students when i taught this, things have

happened before, they can happen again and when you see all the circulation about what the supreme court is going to do with the most important civil rights which i think was the book from 1965. most experts think that that is about to come to a significant and i call a noble and. programs of affirmative action, it was simply a means that you can take positive steps. you can indeed pass it. you have got to take positive steps to overcome recurring fx of past discrimination. it's just not going to happen by itself. if you bring that to a close and there are people who are speculating that is about to

happen and i saw a few days ago one of the leading scholars, legal scholars who are saying that he believes the chief justice roberts planned to be the chief justice to the civil rights movement. anybody can look at the numbers and see that unemployment had and the apartheid community runs twice of what it runs -- and that women are still hurting 70 to 72% in what men earn in our society. and think the glass is full.

the glasses may be a little more than half full but it's not full. there is still a lot of work to do. i don't think we are going to successfully navigate through this and understand exactly what it is we are dealing with. if a people fail to learn history, they are bound to repeat them and i'm trying to sound an alarm here to make sure that people who have risen educationally and gained in wealth just remind them to look and you can see all of that with the stroke of a pen and a few court