>> a couple of questions. tell me why 21 million is the magic number. >> like i said with a block time being 10 minutes that's just the way the program is designed. i don't want to blow your mind too much but there are a bunch of old coins. bitcoins introduce cryptocurrencies so there's a bunch of different cryptocurrencies like light claim. like coins current value i think is $11 a coin. it's cap is four times as bitcoins and it's every block time is two and a half times. it basically was created by an m.i.t. grad. .. more informational passions i'm going to move on to the panelists. when we had this 21 million, is

there anybody that has bought about 1has foughtabout will thaa discontinuous sort of milestone or will things keep going the same? has anyone thought about that? >> yes the program is very clever in that every transaction it's recommended that you tip the minor as you tip a waiter. it doesn't matter if you are making a 20-dollar transaction or a million-dollar transaction you can tap the miner a penny or less than a penny and that is more than enough because all of the text between the ten minutes of transactions that adds up to be a lot. so that's the way as opposed to paypal which will take a percentage of what you're transacting that they don't care. we could honestly be transferring $100 million or 1 dollar. the transaction fee will be less than a penny and after 21 million have hit that is the incentive for the miner. but the reward decreasing in the way to be finished rewarding

than about 110 years. >> my understanding is that it's not like we will run out of money. we can just say we can keep using smaller and smaller. we can keep chopping up the piece into fewer pieces. >> a lot of people will refer to them now as micro bi bitcoins. if i'd had $100 in, i don't want to be getting .1. that's kind of demeaning. [laughter] >> last question. what is it about the inventor, where does he live, does he exist? the person that wrote the code explaining what the code does and what he feels like it should accomplish, this person doesn't

actually exist. there was a story among or two ago about a reporter saying that they found him. he was using the name in california, that they just really poured through his life and he was just the guy on the model train. but the thing is in my opinion i don't think that this figure could have revealed himself. i don't think that it would be viable for something like this because if i had a guy or an organization if we knew who did it, than the first response would be it is going to profit them. they created it fo for themselvo no matter where it goes they are just basically doing it as a ponzi scheme. so i think the reason that he did it anonymously was to try to just really a sure people yes,

this is a new technology. i am not trying to game you. just do with it what you will. i think that you have quadrupled my knowledge. what is your take on this? >> your central question was what are the implications between now and 2050? i'm going to pick up two aspects of that. one is confusion and security. and the second is how this fits into the larger government battled over the last i would even go back as far as 30 years and maybe even a little bit further. the part of answering the 21 million is it was sort of arbitrary. 21 was kind of fixed and maybe it's not completely arbitrary but there is a lot to it, and that bothers a lot of people.

but, dollars are arbitrary. a lot of financial instruments have arbitrariness built around them. the true financial professionals will tell you even gold is arbitrary. and over time we introduce a new financial instruments of any kind whether it is a currency or a commodity there is often a lot of confusion about it, confusion by government, confusion among the public and even confusion among the professionals. this is no different than when we were introducing paper money when the united states was going to paper money folks could be rolling out all sorts of different dollars. the greenback was the federal government trying to come in and that's why we have the secret service. they rolled it back in the 1860s and the secret service was there to nick sure this was

the one currency that we had about the different banks could be printing their own u.s. dollars. and we had lots of other confusions when we rolled out the instruments. the archery stocks. they were in this piece of paper entitles you to a portion of this company. just like we had security issues for thi bitcoin, the stock certificates saw all sorts as one of the classic incidences. i watch a lot of turner classic movies and it seems like every other movie is about someone perpetuating some stock fraud. i worked in hong kong for a while and you would see the way that the modern chinese are dealing with the stocks that are coming out and it seems very familiar to those movies in the 1930s. the new financial instruments on its confusion about it.

a lot of arthur train us david christie si -- arbitrary. on bitcoin i think it might prevent bitcoin from being around in 2050. sorry. the issue of the crypto currency these are all completely solvable if there is a pointer to it. the amount of security that you have to put in to make sure that they can be secure or outside of what i would even be willing to deal with with a masters and computer security. you have to really protect your self and its best to have a laptop, separate computer that you keep off line that you are only using to keep your wallet. there are some other ways to do it, but as it shows there are a lot of issues in the exchanges. we are still new to this and

trying to figure out how it is entirely solvable but it has to be usable for people. there has to be a demand that we are not getting through paypal or credit cards or other things that is going to make it as an exchange for you and me. as far as the brought a change this might be familiar to some of you. this was written in 1996 the declaration of cyberspace. the governance of the industrial world, giants of flesh and steel i come from the new home and i ask you in the past to leave us alone you are not welcome among us and have no sovereignty where we gather. cyberspace does not live within your borders. you have not engaged in our conversations nor did you create the wealth of our marketplace. there are problems that we need to solve. many of these problems don't exist where there are conflicts

we will identify them and address them by our means. the concepts of property, expression, movement in the context do not apply to us. they are based on matter and there is no matter here. even as we continue to consent to the rules over our bodies. he was a later assist for the grateful dead and that was representing a trend from the writings of the third wave and others in the 70s and 80s coming out of the industrial age into the information age and the government are going to have less power. it's one of the trends that we talk about in to disrupt.

the governments used to have a monopoly on a lot of areas and on the force and monopoly on other areas like currency. this is particularly strong now in the post snowden era and we are pretty sure he is not behind bitcoin. where you start to see people come and especially geeks, silicon valley, the younger generation say the stuff the government is doing come enough already. we can have our own stuff that is separate. we have our own rules that apply. your bureaucracies, we have our own social contract with is sharing media were communicating or having a strong cryptography. if there are problems, we will solve them. cyberspace occurs across the

borders. so, to me bitcoin in general is a part of this larger trend of the geeks and i mean that as a term of endearment, the technical change this diffusion of power away from government to say there are problems we can solve on our own without the government being there to have to solve them themselves. this is a really strong trend. you are going to see it here in the currency and as people say can we invent a new internet that is not so subject to the master surveillance and attacks or are they going to continue to get involved or are other governments going to continue to get involved? i think the money is on the government. it has been in the past when they've had all of their disruptive innovations. sovereignty still matters a lot.

so, if bitcoin and other currencies remain something that is kind of difficult to use and kind of arcane and seems confusing for normal people to use then probably the government are going to stay on one side or stay mostly dominant and bitcoin like other things that start with crypto will remain for those people that are willing to try to figure out how to use it. if it does turn out to be stronger, if privacy turns out to be stronger and we want a more secure and private intranet, bitcoin and crypto currency could fit in with that and we could imagine off to 2050 the 2020 that these could be very much stronger. so i'm a big fan of bitcoin the system of the ledger that says here's a smart way this could

get done. it could solve interesting problems whether the actual what gets mine is going to be the solution i think it is too early to tell. >> let me follow up on one issue that you pointed towards and then we'll have a conversation among the panel and take questions from the audience. the last point you made is this business model what i called at the beginning the block chain basis is already being experimented for in the recent article of the social networks call twister, and encrypted e-mail, alternative messages, domain name systems, so they use seems to be proliferating the

encrypted services. where do you see this going in the near-term? as people have heard of bitcoin but don't know much about it. where is the next application of this type of process? can a guy he really think of what i has been needed us can handle clicks the mobile money has made a huge difference because people don't need a wallet. they can use their phone. you have a technology that has changed that society because it was aimed under society and now they can use their mobile phone not just to get information but to make payments. it's changed society and incredible ways. i'm not quite sure what the need is that we are going to be using bitcoin for. yes it can be anonymous. you don't necessarily know it's going to rob jackie and phil. it's going to need this

addressing this address a but te cash already fills that need. it would allow you to do it more easily over the network but how many of us need to have a pseudonym when we are working over the internet? you can't get credit in bitcoin. there aren't any good evidence. you can't say what's the 90 day bitcoin selling for that allows you to hedge. maybe we can get there in ten years but we still have to find -- it's hugely volatile right now. we will see. >> i don't want to keep chris waiting any longer. he knows the most about that combine appear so we would love to hear your view on the questions. >> thank you for allowing me to go on stage i know fro i'm overe

business economics program that you are leadership and scope on this issue is a very important one. i'm a georgetown law professor so i want to take a regulatory stab that i think it is important to think about in very basic terms what does bitcoin do, what is the advantage because it helps you put your mind about how difficult it is for the regulators to deal. in its essence when you have any kind of transaction between the party, the information relating to the transfer is not processed in a way that one would normally anticipate particularly when you deal with a transaction involving currency. that is quite simply in our modern financial markets, there

is an infrastructure for certain kinds of transactions that innocentinessence we have systet allow the parties based in parts of the world to transact with one another and that effectively validates and concerns that a party has what it says it has and that will deliver those committed currency to the counter party in a transaction. now, what we have in the bitcoin system is very different. instead of having a central clearing mechanism, we have a democratized process whereby all of the participants in particular the miner who receive incentives go out and fact check the transaction to make sure that on the one hand at the

party who was given the bitcoin actually has what party a says it has anything closely related, there is a recording process by which the transaction is recorded and is then transmitted to the world so it creates a kind of public good good once te block changes created. so it is a democratized system people can participate in the information gathering and the information sharing and to a degree is a market based information system. that is what is fascinating and different from the payment perspective. and then they obviously, the interesting part is that it's a string of numbers.

it's not just a piece of paper that a string of data created with software that is given value that is undergirded by space that a normal currency is backed by the space but it is generated by certain digital communities as opposed to national. thof the participants in that community ultimately give that data the value that the other participants in the system agree exist. that is a 21st century phenomenon because on the one hand you have these new platforms and data and young geniuses at penn state sitting

around and it's something to create the computational models by which you can continually process the data candidates responding to a world that has a growing skepticism about finance and money, about counterparties and finance. then you have the regulators. one of the main reasons one goes to all schools because they cannot do the computational models that allow them to the hedge fund. my students grow up to become fancy lawyers and regulators and it is useful to sort of think about what then is the place of the regulator in the world in which.

what an algorithm is you have to say what is the infrastructure behind the system and what are the relative weaknesses and how does it relate to your own specific mandate. the fact we have a 21st century currency in and of itself creates problems because no one really knows if it is currency or not. i just released a book myself this last week that is basically this idea that the multilateral system of the brendan woods era is under stress. the foundations of the international economic diplomacy are under religion. certain aspects or characteristics is that you

don't try to aspire to the universalist that everybody is involved. sometimes we have certain communities. second, you don't necessarily rely on the economic affairs with the formal legal obligations that the informal obligations perhaps and finally the last is the fact that we are losing this dollar that focuses on different kind of blocks but we are dealing with a different kind of block and increasingly the system. no regulators ask themselves what does all of this mean? but could bitcoin be considered to be? because you can't regulate anything if you don't know what it is so what are some of the contenders for what it is? so you could view it as a

commodity currency however we have an entire list of what the specific data costs for the commodity. but here you have a theme that has an exchange value but it doesn't necessarily have a value from the perspective of the consumption. you do not consume the same way that you eat. so this creates a kind of question is this a commodity? a currency was discussed. we use this term in a larger rhetorical sense. those economic and legal. the currency as an instrument of payment. on the other hand we have a payment that is not universally accepted and it isn't backed by any government it is considered

a store of value for many of us in the room you know that bitcoin has fluctuated beyond the means of the fluctuation one would associate with other kind of interest. it doesn't need to the traditional concession. the unit i don't go to the store in which my baseball bat is done nominated in tha bitcoin. if i go online it is rare that i see any object necessarily denominated. i use bitcoin to pay for it that the unit of count is some other currency. so it's hard to think of it as a typical currency. is it an investment? may be its security. i see in the background someone that has been in the security.

the security lawyers have a definition of what constitutes the security. and there are certain key elements of what the security is with no commonality. you don't have lots of folks participating in the same way which one participates in the bitcoin. maybe we will call it an asset and that is what they are going to say this is property that it is very weird because the property is not always given this anonymity much less pseudonym so then how do you address ss property rights that you have the fluctuations but you don't necessarily have identities created in a typical property-based system and then finally is it a then we will say it's not a currency that it is a payment system.

we've already had the different participants in these burly and young miner that create a ledger that has been broadcast to the world and therefore it is a settlement system. that's hard because it isn't centralized. and the different parts in that settlement system don't operate in anything that we have seen before for the reason that they have tried to call it a money service business. to make them more compliant with the customer money laundering systems. but even here there is a certain question as to what is the integrity of the payment system where you have not only the exchanges themselves, or you have these folks that can create

ponzi schemes around the bitcoin system. what happens to when you keep the bitcoin what is the integritbut is the integrityof e digital wallet. it doesn't look like and doesn't seem to pass the same kind of institutional muster that one associates with more established regulatory systems. so, as a result, each of those questions is a commodity. is it secure in the payment system? is it a currency? how you answer each of those questions leads you to a different answer of who is in charge. once you get to the question of who is in charge, sometimes various regulators can look at any particular aspect and say that's me. then you have possibilities of overlap, confusion and the like. but to top it all off, you have a very dynamic system that's always evil thing and it's deeply international.

we run out of tokyo that creates new kind of stresses and challenges for the international regulatory system. so from the regulator's perspective, things are just started in washington, folks are going to obviously b be employig the young geniuses to help them figure it out, but it's very hard to formulate a response if you don't know what it is or who is in charge. ..

late 20th century jar begin from government that i heard, and it's not wrong within the con finds of that system. it is a nation state based system, and it is asking nation state based rules. ..i think all the bit of what jay is referencing and our friend here is referencing, is that there are people now who wish to work outside of that. and the question is in terms of international law, whether or not, in fact, we have those kinds of controls. again which he said is perfectly

-- run down the list i can hear exactly what you're saying but those are nice dollar-based, bretton woods system kind of rules. the thing i would say to you is do we need to think more carefully about how those rules are designed? i think you talked about that. perhaps approaching us a little differently. >> i was describing with the regular the response is currently, as is being developed -- regulatory. let me confirm it. so just how difficult it is to i was simply trying to explain to people what the process is unfolding. to your point, do you then look at a big coin -- a bitcoin as an asset, as a property? sounds interesting enough. well, then that means do you have to figure out a way to tax any appreciation of the bitcoin in any given point in time where there's a wide fluctuation?

so when for example, the irs makes it release, tax bitcoin, everyone is saying in his system and there's a large degree of of pseudonymity not mentio mentione are wide fluctuations on a daily basis, not to mention you'll be able to write it off or you can't write out the losses but that doesn't seem like a very viable approach to always be there looking at it like a commodity. >> precisely so there's this question as to how viable, or how exactly would the iris do this? when you talk the international aspects, germany will i believe, and i'm talking later today with the head of -- called this to a digital commodity, whatever that is. on the other hand, some countries have called it a

currency which obviously gets your banking regulators involved. the fcc is worried about fraud. again to your point, tries to come up with an approach that is where the market and technology has outpaced the regulatory infrastructure. you're not going to always end up with the optimal results. one of the challenges that argue in my book is the snake is sort of update how financial market participants and authority talk to one another even across national boundaries. i will say one last thing though. depending on the size of the bitcoin market, that's where you have certain kinds of issues but as i tell my students, always remember this, you choose, young man. i love the fact i can say young man. spent i'll write it down.

[laughter] >> how do you spell that? >> young people twitter. cheese attracts rats. the question is, once you start to create value, once you start you great value you will get lots of shenanigans. lots of jamaican immigrants, all the examples i don't has mentioned. silk road, ponzi scheme. that doesn't mean it is inherently good or bad but it does mean that where you have certain kind of opportunities, you know, folks -- maybe not always the best of all people with the best of all motives. sometimes hereditary mechanisms are not nearly enough so the question is how do you leverage the power of the crowd actually dealing with crowdsourced information, and how do you model the market and get the

market involved in a way, you know, i work into something's with the self-regulatory agency. how to get market participants involved in a way to speak to 21st century problems where the problem outpaces the human capacity, intellectual capacity and regulatory capacity of these. and that is precisely why we are all gathered here today. >> and to bring it even a more practical perhaps, will governments allow a system that allows money to be moved around, that there's no, know your customer requirements, you've got an address, a mobile phone and you can essentially signed up. governments, especially since 9/11 have been particularly strong in saying you've got to know who's working with you. you've got to know signing up for a bank account. that allows the money to move across borders without salute no

visibility by the government. one of the reasons i suspect why russia and china are particularly not like it is, not just because it can be used for illicit purposes, because it completely evades capital control. if i were russia or china would be paranoid about this because of capital. people want to get the monies out of both countries and to get into safer currencies. and those governments have controls on what monies can be allowed to leave the borders. there are no such controls on the. so to imagine the are a lot of government interest involved in trying to stop something like bitcoin right now. now, can bitcoin really be able, if it roasters becoming important, stand up not just against the u.s. government and the irs try to figure this out, but very dedicated bureaucrats to what extent that any such as the that they can't control speech and what they want to

control the transmission of monetary policy. as you say. >> there's a lot backed up against it. >> not all necessarily, not all of that control businesses to the good and in a way i would put it reflective of the values that the atlantic council stands to promote. [laughter] >> i'm giving kevin and little protection here in defense, but he can do it himself. kevin. >> a couple points i want to give my point -- as was mentioned, it's a lot better than bitcoin view that barry -- bitcoin does have an identity crisis. nobody knows if it occurred to come is it a stock? i don't know a lot of terms who's talking about. [laughter] i haven't taken economics get a, but nobody knows what to classify. the easiest thing to do is to

say, to fight tooth and nail come is a currency? is a stock? in reality it's kind of both. as we were talking about earlier, some people just want to treat it like a currency and some people view it as a stock. so it is the best of both worlds where if somebody wants to have a look at the bitcoin and make transactions they shouldn't be penalized as if they were bartering stocks your and another name that was thrown that there is not docks, the online exchange for bitcoin. they were the people to go to if you want to exchange bitcoins 2-dollar yen the pesos. whatever. and the funny thing is that not many people know where encouraging. it stands for magic the gathering online exchange. it was basically a platform for trading card game. when it first came out and 2011, it sent your password plaintext overcome you could see a password on the url.

any script kiddie and his mother could find your password. >> not my mom. [laughter] >> and to basically this was built on a platform that was expecting -- bitcoin was you work and you couldn't avoid bitcoin if you want to but it was worth less than a penny a going. so the build on the platform that was doomed to fail. as bitcoin start again more and more popular be they just kind of added more servers, packed up, date code. so reached the point where there were so many holes and gaps but they were just too big to stop everything and rework the entire system. of course, eventually they were hacked into and the bitcoins were transferred out, or so they say. a lot of people are like, they just hightailed and ran. so that was something that was

favoring early investors. in the day that mt. gox went down i got so many texts saying so, ahead of bitcoin failed. no, it's just an exchange. bitcoin is fine. and so the system really does favor early investors, like if you're to invest in apple or microsoft early on, you'd get rewarded for that. and another thing i wanted to talk about was, it would be nice if the irs were to talk to a bitcoin expert on where, what points they should keep in the regulatory matter. by now that they have something on paper, something sort of grasping it. i really do believe the bitcoin committee will be able to work with them in educating them on what they should do, what works. it's something that bitcoin people believe is stupid or just outlandish, they are not going to follow it.

they just won't pay taxes on it, which is lose-lose because one thing is illegal and one is not getting taxes. they need to work together to come up with a policy that works for everybody. it would be, worst case scenario, the wonderful thing about bitcoin is that governments don't need to approve it. bitcoin can function completely normally without government intervention. so government can ban -- china has been in the news lately because they banned a going from -- their currency to bitcoin and bitcoin to their currency. at the transacting on in the bitcoin, that's completely fine. and even if the work is said don't even touc touch a bitcoin adopted would still be able to do it. so think it's just a moot point for government to ban anything with bitcoin. because that's up with attraction is moving to direction is moving back towards the power to the people, and the government are having a hard time with it.

but it's going to happen anyways so you might as well just not fight it. [laughter] >> tell that to the irs. so now we will open it up for questions. we have a number -- the gentleman here in the middle with his hand up. we will grab everyone over here. >> my name is martin apple and i'm sorry i can't be puffy but i will do it again. i want to look at this as a different phenomenon. to me, this is an experiment and the alternatives to currency as we have known them. and whether it fails or not is irrelevant. it is going to be probably succeeded by yet another experiment and until people get to the notion that everything that we have always embodied as something physical in the digital world doesn't have to be. secondly, everything that is in the digital world is so universally distributable, that it's out of federal controls of

any particular country, and there will always be some kind of a threat. so the question is how do we want to learn to live with this new evolution? because i think trying to stamp it out will not be the successful story. i think it will continue to evolve and create until a successor does occur. >> so, you made an excellent point i wanted to bring up. when the internet was first coming about and servicing, congress had no idea what to do with it. there was a lot of discussion on just completed stamping it out, making sure it didn't, you, cause any harm or do drug-related activity. than today, you can do anything on the internet. you can do anything, you can get drugs, hitmen, whatever. spent what have you been doing on the internet? [laughter] >> sorry i disagree with you earlier. anything you said is great. [laughter] >> don't mess with me.

but basically when it first came out, it was textbased because completely unappealing to the average person who just wanted it for e-mail or just a look at funny pictures of cats but you couldn't do it without knowing whatever coded language it used at the time. and then innovators like google came up, apple, just basically was able to have it, if people want to get really technical they could, and if people wanted it for e-mail, that's fine, too. i think bitcoin is somewhere in away that right now it is a good point that it's not natural for people to have something need to be so secure because if you have $100,000 in bitcoin and then one day you leave your computer on or you go to the wrong website and to download the wrong things, it's gone. so that's something that in the next khmers i'm sure that developers will be able to help

people make it easier for them to make this a viable method of exchange. exchange. >> i think one of the real problems here is that this is a 20th century down with 20th century ideas and 20th century institution. i keep saying that, that's what we grew up in. this is the 21st century. this is about the cutting edge of technology, but it's also about jumping generations here, too. i'm less concerned about -- not less concerned, but it interest me that many world -- third world countries or underdeveloped countries, -- i could see an unstable countries -- unstable countries in africa. are you kidding me? this is great. so while it's interesting that we are of course the status quo, and we're status quo power and we're protecting ourselves here, that in pakistan is going to go on. i quite agree with you. i think this will go on quite well in terms of the 21st

century. the challenge of course would be for these guys down here which is how deregulate this in a nationstate? i don't know how you do that, frankly. >> one of the first things to do is to write up something that you don't understand, or at least be very careful at least when you regulate something in fact you don't understand because you do want to make sure that you the opportunity for that, for technological innovation to develop. i did want to make a couple of basic points are it's not just the chinese just wanted -- they are really basic power politics, interested about controlling the national mantra supply and the like but there were questions about showed a bank be able to lend -- should a bank able to lend money to a broker giving and bitcoin? in the 2008 posted enterprises will that becomes not a 20% your bubble but because the problem of the last couple of years. what should be the relationship

of this new payment system -- was should be the relationship between 21st century payment system with a 20th century payment system? like that is something that you cannot just overlook. and so, and then how does a 21st century -- how does a 21st century exchange deal with a 20th century exchange. we are using words like a ponzi scheme very, very -- you know, loosely but how that is an old school problem that works itself out in very interesting ways when you have a potential bitcoin exchange. the only reason why i'm saying this is because, bitcoin offers some amazingly interesting opportunities. on the one hand, one of the drivers behind bitcoin was in an age of what appeared to be

western prophecy. you had the opportunity for individuals to create value among themselves where you're not entirely dependent on ostensibly purely politically driven government decisions, right? so you give this opportunity for people to great their own hedge to protect themselves. it creates essentially or in some ways when done right, you know, by cutting out certain kinds of middlemen and by employing minors it at least offers the potential prospect of being able to make payment transactions in a way that is more efficient and less costly to people in the marketplace. so it's not like it's all coming out of nowhere. at the same time wherever you have the internet and have the opportunity for human trafficking or hitmen -- please don't hurt me -- obviously coming, both of those problems are age-old problems that you a

new life when you have the 21st century technology. answered even at the nationstate level there are questions, and to the when the nationstate looks at it, ma they will ask themselves how can we regulate the a lot of times the question is they will never be able to be entirely successful but we just want to make sure. regulators and market participants are as good as possible and to keep a certain dollar open because they will not be able to cure all the downside with just one for sure. >> let me collect a couple questions. >> please identify yourself. >> charles. i'm from new york. [laughter] >> microphone. >> isn't that right?

>> can you speak into the mic? >> yes. i'm a recent graduate from fordham law at am writing an article right now on bitcoin, and i would like to create either a market and law and this is typically. i share your skepticism regarding the regulation. in regulation you're always wondering about the policy behind it. i'm directing my question though to doctor brummer. you expressed the problem of basically regulated trying to basically fit a square peg in a round hole. that's not a unique issues surrounding bitcoin. is generally anytime something is new you are dealing with the traditional system. i'm wondering whether perhaps the best way for regulators who are facing serious issues, real issues and were unique regulation and good regulation is whether they should look at bitcoin and define it by its function isn't trying to look at is this a commodity?

it doesn't fit into the traditional norms of what a commodity is, and what looks like a currency, regulate as a currency. obviously, not just to regulate regulations sake but for serious real issues. >> i think what, i think it's a great point. and the 21st century of have a much more objective base process we want to ask yourself, what am i trying to do before i get involved. but understand what you want to do again yet to answer basic questions of what it is, what is the nature of the problem i'm trying to deal with. and in a new technology, this is not, bitcoin is a great interesting question but there are other important ways in which technology is impacting finance. you can look at everything from

high-frequency trading to crowdfunding to all kinds of related issue areas where you get crowdsourced information and new technology and new platforms that impacting the way people do business. you have to take a step back. in bitcoin i think is particularly difficult because of the math, because of the fact that to do with pure data and it stretches the human capacity intellectual capacity of lots of folks over at agencies, including myself. what i try to figure out, what would i do? people will call me as well and see what would you do, what we do? i can't tell you exactly how it would come out, i can only give you some basic idea of the process that i would undertake to begin to figure out what i would do. and i think that's the best and the wisest course for most of our regulatory agencies because

everyone is try to figure it out the particularly when the market participants themselves, granted the rest of the world is a little dumber but nonetheless actively for the market participants themselves that there is a challenge for them to fully articulate what it is that they are doing. and in that kind of world you have to move to create a smarter dialogue and a smarter process. and i have ideas of how you would get that up and running but i can't tell you precisely right now. >> take quicker questions because her time is running out. if you can keep your questions short. >> thank you. i'm the treasury of the bank in washington and my very much involved in transactions on a daily basis. go back to the questions about rules and saw. would it be in the bitcoin communities own interest if you mainstream bitcoin? wouldn't you becomes dead of winter, to try to get what it is

an regulate, would it be better if you said please, help us move bitcoin into the mention because then you will become a dominant exchange of value? thank you. >> national intelligence university. my question along your lines is it inherently beneficial for the government to get tax revenue and not make its citizens a criminal win-win situation. how does a government help provide better security and have access to the big paper trail, that ledger you call, that way the irs contract and made when you fire taxes yet to give your public account domain, username so that way they can help track for tax purposes? for you, doctor, can you explain money service manager versus exchange and how that will affect tax filing purposes and how you maintain being a user and not become a money exchange

manager? >> let's take those two questions for kevin and chris, and then we will take a couple more. >> you a question is basically how would a government be able to track your funds and, therefore, tax them? summit. >> for social security. [inaudible] >> i think it's somewhat to the first question which is, is it a useful approach for the bitcoin community to help figure out the regulatory approach that works for all parties. >> i do completely agree that there is a need for coming in a, bridging of the two worlds. as for how they would do this, they could theoretically give the government, your public address and if because bitcoin

is based on a public letter they could see exactly who you're paying a two -- not like you but they can see the addresses it's going to come and then where you're getting the money from. so it could adapt maybe to like it or using it as a currency, maybe because i know tiger direct and overstock.com, accepting bitcoin as payment. so maybe if you're doing transaction like that maybe the tax purposes will be a little different than if you're using an address for something a little bit more substantial, more like a car or a boat or something that would need a little different tax implicati implication. >> hold on a second. spent just to say, the money service is just to do with whether that you look as a payment system and irs is asking module basic questions, is it a property or asset that needs to be tax? want to jump off on one thing.

the irs has said that even using the public key, that they can in certain instances backtrack and look at the patterns of certain kinds of payments, even using the pseudonym to be able to identify the real person. the wizard behind the curtain. for each transaction. but the power and the time required for each of this stuff is so extensive that it would be very hard under, in today's world and to be able to regulate every bitcoin transaction but instead, like the irs and the idea of looking at the money services industry, the idea is how can we better make sure that bitcoins aren't being used for illicit purposes, in particular, money laundering, terrorism, narco trafficking spent which put you in a position which part of the government has that capability. and i'll give you three letters that do. [laughter] after all said and done there's only one that has that kind of

computer capability and do you want to do? >> i think it's in a very difficult place to get the bitcoin committed to stand up to the. you can get there a couple of ways but either they're threatened by extinction by regulation, government crackdown so hard that it's an item of last resort. so many folks in that community see anonymity as one of the reasons for this system i if you have anonymity and assistant, what's the point? why don't you just use dollars? i think they would have to be some value but if you come forward. if it's kyc, an it's easy for an exchange to exchange will be recognized i the authority to kids easier. more safety and security. if you come out publicly to be associated with your private key and associate with an exchange. there are benefits that come from the. you can imagine other ways we have done this that you come out, but it's not like bankers. it's not like you can go to ubs and tell us everyone who ever is

because there's no real they are there. as you do in going after other corporate. i mean other sovereign, sal burns that have corporate banking secrecy laws spent unfortunately were out of time for questions or any last comments from any of our panelists before we formally and they see the? >> i must tell you as a member of the intelligence community, i think i would have a numbers problem dealing with his. i think for both a counterterrorism standpoint but also from the standpoint of what this does to nation's currencies, especially beginning in countries where you get unstable perches. are going to get a class of people that are using this in the elites for instance, and has that going to affect their behavior for the government. >> so two things. one after this if you want to see my mining rig, i worked so hard on it, i'm happy to show you. and the second is, you know,

we're talking about bitcoin here but like i said before, the greatest get bitcoin is given us is a blockchain.info the way they can do something like this without needing a central authority. so in the next five years is it going to be bitcoin? maybe. who knows? but i do know that there's more and more people getting interested, more and more ingenious developers, even smarter than me, who will create something that would just be able to make crypto currencies something that everybody would want and everybody could use. spent i been skeptical in the brodom -- broader term. look at what we've been going through this last week on ssl. it's open source, people and look at this standard for years and years and years to the internet is fundamentally insecure. at almost every level, even those places that have had a lot of scrutiny.

so if crypto currencies are going across, they've got a lot stacked against them. dollars at the end of the day, you can have counterfeiting, that happens. you can have inflation to it tends being an issue we can get past backed by the full faith a united states government. or whatever whatever government. when you have easy to problems in wednesday's crypto currencies, it's more difficult to get past. it's 51% of miners agree on something, you can make changes to the standards in ways that allows power and energy you just don't have been fiat currencies, or only left to the sovereign. i think that a lot of things were going to have to get through. there's a lot things that sound like a good idea on internet but then to work out. we don't order our groceries that much. is because something make sense, just because it's technically

possible dozen it's going to happen or else we would've all gotten you you on jet packs. >> i guess i will actually -- speaking of jet packs. i think that the core question of what happens when you digitalize information and what are the new kind of opportunities it allows market participants of all shapes and sizes to connect with one another and to transact with one another across borders, it's not in the bitcoin iteration. one of the challenges will be exactly how do you engage this phenomenon, that is fundamentally reshaping our society? >> i could go on another two hours. i've really been educated and also entertained, but please join in thanking our fantastic panelists. [applause] >> thank you.

>> [inaudible conversations] co.

this hour long program starts now on booktv. thank you, everybody for coming. stannic thank you for coming welcomed to visitinglow the american columnist at the examiner. i am involved in the culture of competition where we talk about competition and subsidies in crony capitalism and the other thing i work on is called the program on human flourishing where we talk about happiness and both of thes are talked about in the book we are here to

talk about which is "the up side of down: why failing well is the key to success" we have the author megan mcardle who is written at the news week and the columnist. and tyler cowen is our respondant from george mason university. a couple quick comments about the program. if you have a cellphone, turn it off, first. feel free if you want to do twitering stuff about this. we just don't want phones. there is time for questions but it will not be formal. it will be something like a question. think about making your question as concise as possible.

we will break up at 6:30 for wine and cheese and we are selling copies of the book outside. if you like what you hear, i recommend you buy them. i am in favor of people buying books they find interesting. >> me, too. >> thank you for coming. megan, i read the book. i loved the book. i thought there was a dozen interesting things in here. more than that. stories from all sorts of things ranging from bad date to failed companies to drug addicts. my favorite line was if you don't already have trouble with delayed gratification the best way to get there is develop a drug habit. i am probably misquoting it. >> no, that is right. >> we have a washington crowd, what do you think is the most

interesting thing you came across while writing or they will come across reading it? >> i think we know failure is a learning and we learn by failing starting with learning to walk all of the way up to how the economy learns. most products and companies fail and even successful business people who have done this before has a 7-10 chance of failing the next time he tries to start a company. the biggest thing was how bad failure attitudes are to change. as a writer i have what is called a fixed mindset. there is two ways you can approach a challenge. you can approach it as an opportunity to learn something and expand your brain or you can approach it as a dipstick that is measuring your in it level of talent and ability.

most writers are the latter. they call that a fixed person. gross mind people take on better and learn more from the challenges they do face and they do it again and develop more but it is hard mentality to develop. you look at the way most bright kids go through school it is easy and you learn that success is about finding work easy and when you get to the big leagues that is no longer true because you are competing with all of the people that found it easy and you have to have the grit and resillgence to take on things you might fail and to learn from them. so talking to carol deck who is the psychologist what came up with this through here research and i said at the end of the interview i said i feel like i am a fraud because i am a fixed person. i feel like every time i take on a challenge and fail i didn't

have what it took. and she said me t, too but i changed and i knew i changed when i said i suck at this, this is really fun. and i thought i am never going to get there. i don't like doing things i am bad out and over the course of writing the book, i did. and it wasn't because a lot of these are 12 steps to help through failure but this was jus reminding myself of the truth which is when we take on things you don't know how do to. you think about tennis. you didn't sit down and think of a theory of tennis physics. if that was the way to win then wimbledon would be won by a guy with glasses at mit. you learn to hit a ball that

doesn't go where you think it was. and by accident you hit it in the right direction. and your brain makes a connection and you say that is how it feels. you don't know what you did so the next time you hit it doesn't feel like it but overtime you develop that habit by finding the way that works by hitting it many many wrong ways. developing that ability to embrace that isn't a matter of having a 12-step program it is just a matter of reminding yourself this is true. and saying i will probably not be at this but i can get bet skwr and the way is by not being good at it. and things with unemployment where you attribute things that happen to the agency of some person. this person which someone is

mean to you in the supermarket. you think that was a terrible person and you don't think she probably had a bad day. and just reminding yourself it is probably because their mother is sick does change how you interact with people. it is easy to describe the ways in which it is hard to fail but i was surprised at how easy it is to merely by describing them get better. >> tyler you have thoughts and continues on every subject whether it is thai food or what not and when you read megan's book what struck you as most interesting? >> this is a great book and you should all go out and buy nine copies it.

we should be calling the up side of up. i learned we should teach young children to play chess because you cannot be good at chess so you have to learn failure and it is measured and you see everyone around you failing and you know how bad you are but you have have way of learning how to do better and you can measure your progress and this is one of the most important skills to teach people early on is how to fail. and we need to think about this more in educational terms. when i think of failure and how to move toward success i think immediately of issues concerning children. to say that one had a child and you are asking yourself what can you do to make this child learn the lessons of this book. that is the big question coming out of this book. we have learned these lessons as nation and i am afraid we will forget them and there is a

future with so little future and little measurement that we will lose the up side of down and become a society where second-chances are more difficult. and i am intrigued by the idea where failure is good for you in areas but disastrous in others. the bitcoin incident where the money is gone. 13% of all bitcoin in circulation is the number? >> i don't know the number. but it is large percentage. >> megan thinks this might be the end of bitcoin. and we don't say they will learn something from this. there is a fixed architecure to

bitcoin. so the architecture and the mistakes to scale multiple and things go poof. think about the cases we see learning in the austrian sense. what are the conditions where you get one outcome other the others. i would say read the up "the up side of down" and the sequel which i predict there is going to be >> i am teaching my son and daughter to play chess and as a result i always win. and now my brother challenged me and i was afraid to play him

because i got so used to handling. on a policy front, your book end with a discussion of u.s. bankruptcy code and how that is so different from the rest of the world and in general, and in fact your book starts in the forward with a comment on how america is sort of unique compared to at least europe in our approach to failure. a story i was told by a european cabinet member and this might have been angela merkal. this top official told a group of us travelling there wasn't a lot of business formation and somebody said my and she said europe has been historically two people the risk takers and those that fail and then those that

just go by what they say and she said the first group all went to america. what is that about >> bankruptcy is a modern invention. there is something that looks a little like it in british common law. but in our constitution it says the federal government has the power to create a bankruptcy code. and you cannot prove this because this is because so many founding fathers were in debt. when thomas jefferson died they were taking up a collection to pay off his massive debt. he was a very good writer and not good at running a plantation. and that actually ends up showing up, i think, in a lot of national characters. our bankruptcy code is so much more generous and people are surprised to hear that harsh,

mean american is lenient if you get into finance trouble. i went to memphis, the bankruptcy capital of the world, as a journalist, to go look at. we are the bankruptcy capital of the world and memphis is the capital of the united states. 1% declares bankruptcy every year. if that were normal, half of the people you would know would have declare said bankruptcy and that is not the case. i went to memphis and you would expect screaming mothers throwing their feet at the -- themselves at the feet of the judge but no it is like i don't have the money.

i tried to describe what the new reform looked like. and my colleagues said you have to reform that. and i said that is the new reform. because in no other country in the world can you say i cannot pay and the judge says okay you don't have to go in peace. it is so different that early in the book i was interviewing an ex pe expert on another topic and he started makie fun of theing -- making fun of the code because he thought it was absurd you could borrow the money and weasel out. so the law is federal but the exemptions are state. so if you shield more from creditors you get a higher rate

of entripenursh and in 1998, wh set-up the final bankruptcy code -- 1890s -- all of the people in the west like the people in the west had two senators and said make it easy for me to get out of my debt and they did. in america we tend to view people that declare bankruptcy not as rich people trying to get out of playing their taylor but really it is. these things build together. and i was asked today could it be genetic and i am sure there is part of that.

i was talking to a historian who said the vikings are the violent race and then turn into sweeds and what happens? well the violence and war-like ones left and now in minnesota. so, that could be part of it, too. but i think a lot is the culture and institutions because when you see people moving to a state of high level of people starting out they are participating in that culture. >> the other side is worries about moral hazard. any time you have thing saying if you fail you are okay and you are encouraging excessive risk taking and by all accounts the collapse was from this. there was ubber support behind

the banks that were only allowed to fail so much. it is causing as much harm as the cushcushioning is causing. >> this moral thing is real. i disagree about the 2005 bankruptcy reform i was against it and he was for it. but he said you will see the rates of bankruptcy drop and he was right and i was wrong. i think we can infer there was abuse and people that didn't need to declare bankruptcy were. and most people that could benefit from bankruptcy don't use it. by far. percentage is many more people don't use it when they could than do when they should not. in general, we focus a lot of on abuse and moral hazard because it ticks off.

we ask be angry that these people. but the optimal level of abuse isn't 0. you talk to banks and they don't say this, but it is wildly known they tolerate some level of embezz embezzlement because the reduction isn't 100% because getting the last 10% is so much more expensive you have consu s consumed. it is like your immune system. you don't want it attacking everything because you get autoimmune and die. i attribute to the desire and belief you are engineered the risk out of the system. i was reporting on something

called the great moderation when i started and whole careers and ken rogue said whole severe careers have been build on the dissertation of the great muderation. i don't know what happened to those people. >> what is that idea? >> that regilators got so smart and good at their jobs we would not have a financial crisis again. it wasn't possible like in the united states or eu to have a crisis like we did in 1930s. the bankers, you would talk to them about debt and mortgage bonds and they would say things like for this to be a problem you would need a sustained nationwide decline in house price and we have not have one of those since the great depression. with the implication since the great depression was impossible i think of the financeal crisis

mostly as a story of everyone getting the same bad signal from the market. the regilators were easing off in various ways and what they saw was nothing happened, the economy degree and inflation was level and everything looked great. bankers were loosening credit restrictions and they saw the faults were going down. it wasn't dangerous to make a sub-prime loan for about ten years. every year they inched it wide skwr and the defaults were fine and now we know house prices were rising so you could sell your house. everyone saw home owners got rich b b with buying a house and

installing a pool and you can retire on that. when you get to a place where you are safe it probably means you have reduced number of bad things happening, but increased the shock and you are not prepared. >> megan says it was more the suspension we were not going to fail that led to the crisis. i remember reading an article called the inequality that matters and bankers were banking on the fact they can not let us all go out of business. so you bet on a catastrophic event. do you buy into his mass idea they are save or moral hazard that they will not let the bank fail. >> i think you have both

factors. it isn't like the banks said i am going it take a risky gamble and if it goes bad someone else will pay. they are not cynically playing mor moral hazard. the explanations are fully complimenting each other. today in the united states, as a result of financial crisis, we have the long-term unemployed and they are keeping their wages high and they are less mobile and they as a group of people haven't found the key to success. and what is the variable that makes them different than say

you ended up with a job doing wonderful things? >> part is systemic. i was unemployed for three years. i had little jobs but nothing looking like a full-time employment opportunity. 2001 was bad but not as bad as 2008. if you lost your job after 2012, you are back in the labor mark of 2007. people who lost jobs between 2008-2013 are still stuck. your resume ages and you are in real trouble. even back in 2011, i observed you had two groups of people and this is a bit of a simple

equation but you had people freak out and did whatever they could. i knew one guy was working for his uncle's pizza place and opened up frantuochisfranchises. it turned out he liked making pizza. it was the people who were willing to do anything. and this is often not what you would hear. i cannot take a job at walmart it would look bad. but you see the people in starbucks saying you are good at selling come work for me. every time you do something you are opening up the possibility of opening up something better. part of it is moving around.

part of it is i liken unemployment to a dark room where they shove you in, and you cannot see anything. you need to find the enterance. it is dark and square scary and you will not find the opening if you don't move around. you don't enjoy failure. when you are unemployed and every time you go and look for work you are saying do you want to reject me and most people say i do. so the people that kept trying anything. and one of my favorite stories is harland sanders. he is a serial failure. his wife left him. and she came back but they fell

apart. in his 40's they get together and he has a cafe now and the state of kentucky built a freeway and he lost his business. he is 65 and takes up with a pressure cook and goes door to door and says give me five cents a chicken and i will show you the best way to cook. and he asks a thousands people and one took him up on and the rest is history. is everyone going to be kernel sanders? obviously not. but how do you have the best shot? keep moving. and i think policy wise we make mistakes on that. we are looking at north carolina's unemployment benefits

and we see it is causing problems because it is the worst feeling. ...

we really need to be thinking of this personally. the main thing to do is keep moving and do something, it doesn't matter what. took a job walmart. do something that will be back connected to the labour force and then work from there instead of waiting for something to happen. on the policy -- to be our national priority right now, this anomaly stupid waste of human capital. it's bad for individuals because of plant has about the worst in the can happen to you in a modern society short of death or dismemberment, but we're already losing labor force participation people are retiring. baby boomers are leaving the work force. we cannot afford have these people out of work. >> i want everyone to come up with a question and a minute, but my last question for you now call everybody contemplates and all your question. the talk about blame in the book. sometimes owl it is almost instinctual for us to bring people. i think that in my mind that ties in with kind of their --

the american mind set that made us so upset about the bailouts and other things. you did something wrong. you want to suffer. sometimes i wonder, a loss of compatriots who are conservative, if that is part of their opposition to a generous safety net. they think if you're not rich is no one's fault but your own. let yourself. is that a natural thing, an american think? is the problem at that we need to have some sort of blame? >> sir, the mistake is to say it let's try to make it not happen. but it should and have very specific way. an example of really bad philly, feeling that his prison where you kind of screw up, do something wrong the 20 or 100

times and then we locked away for 25 years. it's not a good way. you destroy a human life which is serious, even if they've done something wrong. most people in prison have done something wrong. i spent a week in the system which would be enough as a journalist. they did actually locked me in a holding cell for a minute. i thought, would do anything, i would be on my knees in front of a judge sitting out or never go back there. it was amazing to me. but it is a really bad way of handling it. i think americans, our answer to the crime wave been hitless to make sentences longer. that didn't work. will we should of been during was making the more sick -- consistent. so i think that way with bankruptcy. bankruptcy desert, and it should

. most people in bankruptcy did make mistakes. they don't just end up there because of financial whirlwind came by. most of them borrowed money that they could not repay or borrowed money that if anything went wrong there would not be older perry. many people in this from our wages say if there were out of work for a year would not be able to pay their debt because that's generally true of most americans. i'm not picking and you guys. most people live that way of the people who got, live in a way. and so generally is not that there is a more and we don't need to punish people will focus too much on it. a problem with it is first of all we tend to do this thing brainstorming. the sit-down. that tends to make people overlook the systemic. okay. now we fire the guy who feels sure that every so have exactly

the same system a problem. so generally i think it's not that you don't want to be consequences of failure should not feel good even if you didn't do anything to deserve it because otherwise you won't. what you want to do is figure out, are we making the planes the right kind of pain or not? probably did not to a great job. on the other hand relic of the great depression. >> those guys are still rich. >> well, the bank ceos -- >> i don't think that's right. if you went to a person, if i lost my job and a person in tanzania has been a while sad about it and i was i well, summer house and move to an apartment. hot and cold running water. your not going to be hungry all -- it doesn't work that way. you don't think a well. i guess i don't mind losing my job. they feel the same way.

people are special in that way. everyone is losing status. everyone hates losing 95 percent of what they have. so you know, i don't know how much -- the acted like an idiot. it's hard to read about what he did not think he acted like an idiot. he acted like an idiot in a way that many people in the world act like idiots. do are what the single amount? if you were not for him acting like an idiot everything would of been fine. attended think there would have been some other it. >> before we go to questions you have any -- >> i've been thinking about what is the social wedge here? that say you take biology, bad for the individual animal or human being, but they may be good for the species as a whole. evolve, change, develop. so on that overall by you saying

that it's something that is good for society or good for america but actually bad for people? with need to subsidize, take more chances for mutual benefit. if everyone does better will be good for most people, or you saying that it's something which if we did a bit more about the margin would be good for ross. we can't do it because we're weekend graven in we need to be nudged in that direction? and will be good for individuals and be good for the broader policy. now, you're saying the latter, the implications for children and education. one thing interesting in your book, very little in hear about children which is quite striking how one would deal with the child, a very good, cutting edge question. there you just care about the child. you don't care about the social benefits. so in general what your views

are, the wedge between private and social benefits, what can subsidize, what are the behavior of imperfections and do we as purely selfish individuals actually want to take to repel which would mean we take more chances and have all that pain in the meantime? should we take more? we should take more. >> i say this is somewhat weird. i may not be entirely objective. the downside in america is just not that far down. as i say, the worst thing that happens to most people lose their jobs that they end up living in a smaller house. it is not that the end of starving to death or that they end up dying of some disease that we know how to cure but did not bother to. and given that, on the margin we should be willing to take more risk than we are. we tend to think about this as a freer still out on the belt so

wired and if we screw up we could get eaten by a saber tooth tiger. actually don't know if saber toothed tigers live there, but sailing gracefully of words, for individuals it is also better to take more weird bills. is not always such a happy place to be because he's been too much time trying to give your place in it. and i think of this as education i did have a chapter on kids in the book. since i don't have kids that did not want to be chief of hate, i have a lot of great child parenting tips for all you folks are actually doing it. but so to let the with the educational system works. it's a good example. i think it's reasonable to say that 60 years ago college education in america actually was a way in which people were

acquiring skills and actually sort of bettering their productivity in their chances. now what you are looking at, there's not nearly so much pressure. you went to college. you could afford to work your way through college. the cost of it was minimal. the upside was pretty good. now college is mostly about as far as i can tell, people in the upper middle class are desperate to make sure their kids can't possibly fallout of the upper-middle-class. now everyone wants to send there kids to believe schools with exactly the same number seats in 1973 more laughs and a lot more kids trying to go through the funnel so that when i was admitted in 1990 it was about one-third of the class. now it's under 10%, and that's the second-highest. and it's making people act insane, and everyone hates it. all the parents to spend all the time being terrified of the children will end up homeless.

reacts to that by spending all their time shepherding their children to 97 activities designed to ensure that there about a champion concert violinist an award winning soccer player as well as being a straight edge students of it looks go to college education. they hated and feel like they can't stop. we are now in this euros some competition where we are doing more and more things no one wants to do merely to ensure that we stay in this narrow gap. >> while. my kids lose lots. questions starting in the back. wait for the microphone. we have a microphone coming on the back row. great. >> much obliged. you know, among the lucky folks. could you survey the gulf, all of the points you made.

>> it's a big difference. it's actually interesting. we are not the best. we should make it a lot easier. just in terms of the paperwork. one way in which we're doing worse of this, america is getting worse of this a lot of ways, the state of radical uncertainty where talk to a guy who started the business. he could not tell whether he was in compliance. this guy was a pretty liberal guy. he was not just a railing against big government purpose. u.s. out against regulations gazetted not know. apparel company would just give him on the dollar charge of something and he would have no way. he would hope there were doing their jobs are because he couldn't tell whether there were in compliance with the parole laws which is a pretty liberal

heavily regulated state. on the other hand, and to be the danish entrepreneur and he was like, it's great. they come in and tell you. you try to fix it because i now want to see. it was a totally different and -- attitude. though we are good that, gentlemen gray story what it in such throwback. some to have heard in other ways to my the people. you know, here it would be like if you were -- issue a general kaytoo is getting married. or would you leave a good job and a solid company. that's because i'm not as kind. we could be better. we're very adversarial. on the cultural side with the fledgling better.

>> he tell the story of the photographer. >> is been basically, he had to lay off a lot of employees in 2001. in denmark have to pay employees and to enter in six months of wages. this is the same time the business is going under. he was still trying to pay off that debt in 2012. the same amount of debt. and he was on the verge of losing his house because of it. and that kind of just tying people told bad decisions, and it wasn't even a bad decision. a photographer and a hint in photography changed. got a lot more competitive. there was a lot more like spring interscope. he's still working as a photographer but not expanding

and can't do anything. he can declare bankruptcy because creditors will lead. [inaudible question] business that had failed. >> talking to an entrepreneur who city actually only likes to hire people who fail a couple of times because back when something goes wrong is gonna be like, yeah, we tried that. that doesn't work. you really wished we done this other thing to read also when things fail generally because they've been through it at all freak out and start right around like chickens with their heads cut off. here are three ways to do with it. >> all right. more questions. appear in the front. >> a want to go back to the higher education issue. it seems like all of the political stakeholders involve, state government, federal

government, think tanks have brought in to the degree and all costs idea. we have more buyers as ours, if so fast co. how do you convince all those people that it skills. >> that's really difficult. as a great pope which starts about the ways in which states have to make things legible in a systematic way. many things that they can see pretty clearly. the degree is easy to observe. that is part of the reason that we are getting into this mindless correctional as an. something that do will is trying to move away from because of stupid. no offense to a college professor. he teaches real skills. similarly if your politician you can say i am proposing that we do a million more college graduates a year.

our number. you can describe how to get to that. it's actually a lot harder than it sounds because it turns out that the marginal people tend to be much more likely to find out of the people who are already there. something to you can pretty easily outline a plan to do with financing. it's really hard to say to want to make american students 7% better at handling failure and 12 percent better at doing basic math. you can kind of describes it. we've been pushing on that. the basic not for a long time. it's slow going. people tend to describe the credential instead of the thing that the credulous supposed to represent. >> your observations in academia, tyler. >> i don't think we need so much to talk people out of that model. a revenue model was collapsing from the labour market side. a four year college graduates earned a higher average salaries in the year 2000 and they're earning today. we had somewhat of a bubble and

student at which is now more less over the media have wages coming down, student at a previous levels being a thing of the past. politicians can say what they're what, but a lot of schools are going to see sluggish and roman commander going to see two sets of responses which will be a kind of nightmare. people who drop out altogether and stop trying. we make it the worst of those two worlds, but i don't think were going to have a problem of more and more throughput. in no way we may envy the days schists. >> more questions. >> yes. john and with the orange park. celebration of denmark's victory >> michael barone with the eye and the washington examiner

orion mccauley of times on both accounts. megan mention that one of the reasons progressive works is there is stigma to. it seems to me that much of american life, we give people second chances. we have to keep up balance. you could argue that in the 1970's we reduce the stigma on divorce. a lot of people got divorced, which turned out to be sort of bad. and as our colleague pointed now , well credentialed, affluent people stopped getting divorced. people and fish town are still getting divorced are never getting married. how do we maintain that balance if they're is a moral component to it? i don't think you address that a lot. i would be curious about theiler's idea.

there's some way to quantify that. >> i think this is usually important. we to enter really underway. there's a lot of thinking. people tried the reconstruct the former soviet union. markets were just the absence of government, this natural areas that we have it turned out the dow was wrong. there's an enormous amount of software. the hardware, the capital. then you can think of the operating system as the institution in that country, the cultural capital you have that helps the hardware run, but makes it worth something. and it's a little things like standing in line. this sounds down, but the way you stand in line matters a lot

for how you manage big crowds of people moving somewhere. it's also the sense that i spend money all the time. this and mist of back. i think of fred -- >> are talking about it was the purchases. ebay in amazon. >> but it's phenomenal how much of that is trust. it would be -- a lot more fraud could be happening and just as an. it's because we have this culture, he see a lot more from happening. if you don't trust -- trust strangers is hard to do and takes a lot of work to make happen. similarly i agree with you that we have a lot of cultural capital of around marriage and family. we decided -- i would actually trace this to the 50's. we decided some time on the 1950's that that was all stupid. there's a description, the

problem of chesterton. a guy says this is done. there's no reason for it to be here. thus the last person who should be allowed to tear it down. the fenced and just grow there. someone put it there for reason. if you know what the reason is you can say that no longer applies. if you just say this is stupid and we should destroy the fence then you are dangerous and should not be listened to. and we did that with a lot of stuff around marriage and families in the fifties. we just decided the for some reason our ancestors or all morons and then we knew better and that we are going to get rid of these ideas about marriage and children and so forth. i think that we are paying the price for that now. it's true that marriage is great and is never been better and the elites. you meet this person, you have

huge numbers of interest. you like vacation together. of the bottom we need to figure out how to put that back together. maria is absolutely right. the valleys are not perris they actually practice. as a lot more like early 1950's america and they work. they're better places to raise kids. the better for the people, battered have someone else to lazar back. those things are important. i don't know how to get there. how do you do cultural change? one of 300 million people out of time. >> i may be more pessimistic about a stigma. i think a lot of human beings as naturally being fairly cranky and prejudiced and a lot of ways our chores variable is how much stigma can we apply? so i'm pretty happy for stigma as a whole to be weekend because

it means a lot more tolerance for groups which otherwise suffered. it means you lose stigma against a lot of past activities also. but i think it's been a big gain to have stigma weekend. even with marriage weakening my reading of that is that a pretty big chunk of men are just run. may be born so. what has weakened marriages women at lower income and education levels a sudden they don't want to be married to rothman. notice can be bad. there are native social externalities' but on all i think of that as a will for an improvement, to be married to some guy. he beecher, other things happen. she's better off on her own launches using that. so even at current margins i would rather still sees stigma as a whole is somewhat weaker and we be more tolerant and less prejudice and incurred a social cost will come with that.

>> we have time for one more question about. >> i just felt the book. congratulations. look toward reading it. >> congratulations to you, sir. >> i'm a winner here. >> thank you very much. >> i wonder if we are talking about stigma and what we could call clemency or mercy. in terms of managing failure, is there some sort of inverse craft that is related to our culture that is have stigma but also values, giving people a second try, mercy, have you looked at that in any prolonged way? >> i have talked a lot about it. sort of emphasize forgiveness. it tends to be cheaper than we think it is. we can often shoot ourselves in the foot pursuing the last measure of justice. some play. if we actually needed that justice who among us could stand

up against true justice. but that does not mean that you should just blindly forgive. bernie mann often something wrong. he should not be allowed to manage money anymore. he should be in jail. the first thing that you want to see is learning from a mistake in the wrong. you want to see repentance. obviously that can be faked. but it is harder defecting you would think. most people, many people don't even bother to try to fake it. so what i would like to think of is tighter -- a lot of fix social restitutions. a lot of this is happening and social circles which is true bankruptcy defeated you are genuinely at the end of your rope and have some terrible medical illness have to declare bankruptcy, you will feel a little bad about it but basically your family and friends are going to say, you know, you've got cancer.

the $200,000 mortgage and you lost your job. what else did you do? whereas a few run up profligate credit-card debt your family and friends kind of know that you were driving a bmw. they're likely to be a little more mean to you that if the problem was a you have a plumbing business you could run were your real. >> in the state can't tell the difference. >> the state can't tell the difference between those things, a big social networks can. that's where this happened. it does not happen very much a lot the government level. >> thank you. we've got a free. first, let's think tyler and making. [applause] [inaudible conversations]