men, to grab a hold of your life to realize that this is one season. you will go into a lot of different seasons. very soon,, conceal our intern came and. i am so happy for my new intern from florida. very soon, there will be a replacement. i will be able tosoon i will het regard because i know the baton has been passed to people who are serious in protecting freedom and how that in itself makes us exceptional, because we are at the light of the world. if we accomplish it here, others will follow. thank you so much. thank you for everything. >> coming up, hillary clinton talks about religious freedom.

then the white house drug- control policy director on the strategy to combat drug trafficking. later, two events from the cato institute. the beginning of economic growth in the industrialized world, followed by the origins of the state. hillary clinton said recent allegations against her longtime aide huma abedin has no place in our politics. her remarks came as she spoke at the carnegie institute on the subject of religious freedom. monday the state department released its report on international religious freedom. this is just under an hour. >> it is an enormous pleasure for me to welcome my friend and

secretary of state hillary clinton to the carnegie endowment. for the last 3 1/2 years, secretary clinton has traveled the globe relentlessly, visiting more countries, and i'm fairly certain, talking to more non- governmental people than any previous secretary of state. under her watch, the united states has ended one war in iraq and is winding another down in afghanistan, as reset relations with russia, though that remains a typical work in progress, and has deftly handled relations with the rising china. she has rapidly evolved a sound american response to the wave of change in the middle east. her leadership could not have come at a more critical time. the u.s. has deep political, economic, and moral interests in the outcome of the arab

awakening. the fact that the awakening has produced free elections in tunisia, morocco, egypt, and libya, while enormously challenging, at the same time it raises new challenges of its own. how will islamist parties governor, what steps will they take to protect individual rights, including those of women, and religious minorities. what if anything can be done to reduce sectarian violence. the state department's latest report on religious freedom -- and we have ambassador cook here today -- that report released today to extend its many of these issues and is that the of the secretary's remarks. no one who has followed her career over decades can doubt the secretary -- secretary

clinton's personal commitment to freedom of expression and human rights runs deep and strong in her veins. her intelligence, and willingness to speak loudly and clearly often very uncomfortable truths has made her a widely respected an extraordinarily effective secretary of state. we are delighted to have her here today, eager to hear her remarks. please join me again in welcoming secretary clinton. >> thank you very, very much. [applause] thank you very much, and it is indeed a pleasure to join you here today to talk about an issue that shapes the lives of people worldwide as much as any other, a religious freedom. i want to think jessica mathews, not just for that introduction, but more importantly, for her service of many years, but in particular, her leadership as the president of the carnegie

endowment for international peace. 15 years ago, jessica was right thing about trends that were just the beginning to get people's attention. the rise of information, technologies, and the creation of global networks that existed outside governments. she said then that those changes would shape global events in ways both good and bad, and that governments would have to at that if they wanted to stay on top of global change. well, she was certainly right about that, and indeed i work to make the integration of new technologies and outreach to civil society groups and the private sector, diaspora communities and other non- governmental organizations, a hallmark of my time as secretary estate, but it is not an afterthought. it is not an add-on, but it is integrated into the work we do, because clearly, the work we do

will be influenced and affected by all of those non-state actors. i want to acknowledge two people, michael posner, the assistant secretary of state, someone with whom i have had just a great privilege and honor and of working with so quickly with over the last several years, and suzanne johnson cook, the u.s. ambassador at large for u.s. religious freedom, someone i have also had the privilege of working with in the state department and in one of my previous incarnations as a senator from new york. others, two of my top advisers on this issue, i am grateful for their efforts, and all the representatives from congress, and the seas, members of the religion and foreign policy working group and others who

recognize and are committed to the importance of this issue and what it represents. earlier today, the state department released its latest international religious freedom report. it opens with the words that guide our work and the work of governments and individuals devoted to freedom of religion around the world. listen to those words, because much of what i will say today is of course bring it in our constitution, and in our belief about the importance of the free exercise your eyes -- free exercise of religion. it is important to remember that these words were adopted by the international community, not just by the united states. here they are -- everyone has the right to

freedom of thought, conscience, and religion. this right includes freedom to change his religion or belief and freedom either alone in community with others, and it public or private, to manifest his religion or belief in teaching, practice, worship, and observance. these are clear and straightforward principles that bring people together in both heartfelt unity and furious disagreement. for the united states, of course, religious freedom is a cherished constitutional value, a strategic national institute -- national interest, and a prayer in. it is urgent we highlight religious freedom because when we consider the glob picture and ask whether religious freedom is expanding or shrinking, the answer is sobering. more than a billion people live

under governments that systematically suppressed religious freedom. new technologies have given repressive governments additional tools for cracking down on religious expression. members of faith communities that have long been under pressure report that the pressure is rising. even some countries that are making progress on expanding political freedom are frozen in place when it comes to religious freedom. when it comes to this human right, this key feature of stable, secure, peaceful societies, the world is sliding backwards. meanwhile, several countries with diverse fayed communities are now in the process of navigating transition toward democracy. they are wrestling with questions of whether and how to protect religious freedom for

their citizens. this goes from tunisia to burma and many places in between. but take for example egypt, which i visited two weeks ago. i had a very emotional, very personal conversation with christians who are deeply anxious about what the future holds for them and their country. what egypt and other countries decide will have a major impact on the lives of their people and will go a long way toward determining whether these countries are able to achieve true democracy. so this is an issue that transcends religious divides. all faiths, everywhere, have a stake in defending and expanding religious freedom. i personally feel very strongly about this, because i have seen firsthand out religious freedom

is both an essential element of human dignity and of secure, thriving societies. it has been specifically linked with economic development and democratic stability, and it creates a climate in which people from different religions can move beyond distrust and work together to solve their shared problems. i have also seen how the opposite operates, the absence of religious freedom. it can create a climate of fear and suspicion that weakens social cohesion and alienates citizens from their leaders, and that of course get making it more difficult to achieve national progress. and because the impact of religious freedom and extends beyond the realm of religion, and has ramifications for a country lost security and eats economic and security -- and political process, more

students and prejudicial errors of foreign policy need to focus more time and attention on it. today i want to make the case for religious freedom and what all people and all governments should support it. i want to address directly the arguments that people who stand in the wake of religious freedom use to try to justify their actions. is like for many who live without this freedom. in the harshest places, certain religions are banned completely. a believer can be sentenced to death. strict laws ban blasphemy and definition of religion. when your words are interpreted as a violation of those lost -- laws, you can be sentenced to death. violence towards religious minorities often goes unpunihsed -- unpunished. the message is clear -- if your beliefs do not have government

approval, beware. the same message is delivered by governments that seek the illusion of freedom by creating official, state-sanctioned religious associations. they say, look, our people can practice whichever of these pre-approved faiths they choose. but if people are caught going outside of these associations to form their own communities or receive instruction from their own religious leaders, they can be imprisoned. religious freedom is not just about religion. it is not just about the right of roman catholics to organize a mass or muslims to hold a religious funeral or bahai's to meet in each other's homes for prayer or jews to celebrate high holy days together. as important as though our,

religious freedom is about the right of people to think what they want -- as those are, religious freedom is about the right of people to think what they want and come together in fellowship without the state looking over their shoulder. that is where the state- exercised right of religious freedom is the first right enshrined in our first amendment, along with the freedom to speak an associate. because where religious freedoms exist, so did the others. it is also why the universal declaration of human rights protects -- human rights protect freedom of thought, conscience, and religion. they all speak to the same capacity within each and every human being -- to follow our conscience, to make moral choices for ourselves, our families, our communities. these rights give our lives meaning and dignity. whatever religion we belong to. or if we belong to no religion

at all. like all human beings and all human rights, they are our birthright by the mere fact of as being who we -- of us being who we are, thinking,a cting -- thinking, acting human beings. they're not granted to us by any government. rather it is the responsibility of government to protect them. this, of course, is not the view held by regimes that block religious freedom. they choose to see things differently. in particular, there are two arguments they make to justify their actions. both are worth examining. the first is that honly 0-- only some people should be allowed to practice their faith, those who belong to the right faith. they define religion in such a way that if you do not believe

what they want you to believe than what you're doing -- , then what you are doing is not religion. there is only one definition of religion. they and only they and the religious leaders with whom they work are in possession of the ultimate religious truth. others depend on a tradition -- depending on tradition are wrong, heretical, infidels. they do not deserve the protection of the law. they may not even deserve to live. because this is an issue that in flames emotions, it can be hard to talk about it constructively -- inflames emotions, it can be hard to talk about it constructively. let me simply say this -- people can believe that they and only those like them possess the one and only truth.

that is their right, though they do not have the right to harm those they think harbor incorrect views. but their societies pay a cost when they choose to look at others with hate or discussed. -- disgust. human rights become real not only in interactions between citizens and their government, but also in those millions of ordinary moments among neighbors and classmates and co- workers, even strangers on the street. every time people choose tolerance and respect over fear and animosity, they strengthen human rights for themselves as well as everyone else, because they affirmed their shared humanity. that is our religious freedom

-- excuse me -- inscribed inlaw, becomes religious harmony flourishing throughout society. religious leaders have a critical role to play in this process. we need them to encourage their followers -- excuse me -- to embrace the the principles of peace and respect, which are not only tenets of nearly every religion, but also at the heart of religious freedom. and then, most importantly, we need leaders to affirm that respecting the religious freedom of others is in keeping with, not in opposition to one's own rights. when people of all religions can practice freely, it creates an environment in which everyone's freedom is more secure. leaders and governments, meanwhile, have their own responsibilities. people can think what they want, but governments have to act in favor of protecting the

rights of all. the world should and must hold governments to a different standard than individuals, whether they are secular or religious, muslim or christian, hindu, atheistic, or anything else. governments have a solemn obligations to protect the human rights of all citizens, no matter what religion as they believe or do not believe. some leaders tried to excuse treating some citizens differently -- try to excuse treating some citizens to prevent others by saying that is what the people want. they said they personally believe in religious freedom, but if a majority of citizens want to see a group locked up or thrown out of schools were fired from their jobs, -- schools or fired from their jobs, well, doesn't democracy mean following the will of the people? the answer is there is a big

difference between democracy and the tyranny of the majority. the liberty that democracy provides does not include the freedom to do violence to the equality of all citizens before the law. that is why universal rights are often embedded in constitutions. they provide guard rails against laws that deprive members of minority groups of their rights. when popular opinion supports restricting the rights of a minority, leader should remember that the older people both their loyalty and -- leaders should remember that they owe their people both their loyalty and their judgment. when rights apply only to some citizens and not to others, when principles are subverted to power, that sows the seeds for legitimate grievances and instability. and when democracy uses

principles -- a genuine democracy uses principles to protect the rights of people equally. a second argument that leaders opposed to religious freedom make is that they cannot afford religious freedom yet. they argue that the result could be instability. a rise in anti-government sentiment, the freeing of social ties -- fraying of social ties, more acts of harassment and violence. this is the same argument that leaders invoked to justify cutting down on political expression, press freedom, or civil society groups, or any activity that questions the status quo and reflects the citizens' democratic aspirations. in fact, long practice and even academic study shows that it is the absence of religious

freedom that is correlated with religious conflict and violent extremism. there is also evident that conflict is more likely when states have official religions and persecuted religious minorities. that makes sense, if you think about it. when people are treated as equal under the law, hostilities among neighbors subside and social unity as a chance to grow -- has a chance to grow. so does trusted the democratic process, because people are confident their rights will be protected no matter who is in power. in other words, religious freedom is one of the safety valves. it lets people have a say over important aspects of their lives from enjoying their society's bully, and channel their frustrations into constructive -- aspects of their lives, enjoying their society's fully, and channel their frustrations into constructive

lives. otherwise, it is a recipe for conflict and extremism. some governments are coming to realize this. for example, in libya, since the overthrow of gaddafi, the new government has chosen not to enforce some of his lost that restricted religious activity. they have enshrined the free practice of religion in their interim constitution and outlawed discrimination on the basis of religion or sect. earlier this year, the libyan supreme court overturned a law that criminalize insults against islam -- criminalized insults against islam. they have come to realize that the best way to deal with offensive speech is to counter it with speech that reveals the emptiness of the insult and allies. egypt is grappling with these challenges -- and the lies. egypt is grappling with these challenges as it navigates its unprecedented transition.

i met with members of the new government, including president morsi. religious freedom was very present, behind closed doors and out in the streets. the president has said clearly and repeatedly in public and private that he intends to be the president of ok'd the egyptian people -- of all the egyptian people. he has pledged to appoint an inclusive government and put women and christians in high leadership positions. the egyptian people and the international community are looking to him to follow through on those commissions. i heard from christians who want to know that they will be accorded the same rights and respect as all egyptians in a new government led by an islamist party.

they wonder, understandably, will the government looking explicitly to greater reliance on islamic principles stand up for non-muslims and muslims equally? since this is the first time that egypt has ever been in this situation, it is a fair question. egyptians are building a brand new democracy. what it will look like, how it will work, how it will handle religious pluralism -- egyptians will be writing the answers to those and many other questions for years to come. as i told the christians with whom i met, the united states does not take the side of one political party over another. what we do is stand firmly on the side of principles. yes, we do support democracy -- a real democracy. where every citizen has the right to live, work, and worship how they choose, whether they be muslim or christian or from any other background, where

no group or faction can impose their authority or their ideology or their religion on anyone else, where there is healthy competition and what we call checks and balances. no one institution or leader gets too powerful and the rights of all citizens are respected and protected. the egyptian people will look to their elected leaders to protect the rights of all citizens and to govern in a fair and inclusive manner, and so willingly. and if voters make different choices in future elections, then they and we will expect their leaders to respond to the will of the people and give up power. we are prepared to work with the leaders that the egyptian people choose, but our engagement with those leaders will be based on their commitment to universal human

rights and universal democratic principles. another important aspect of egypt's transition is whether citizens themselves respect each other's differences. we saw that capacity vividly in tahrir square, when christians formed a circle around muslims in prayer and muslims class tends to protect christians -- clasped hands to protect christians celebrating mass. i think that spirit of unity and fellowship was a very moving part of our regions and all the rest of us -- of how egyptians and all the rest of us responded to what happened in those days in that square. if, in the years ahead, egyptians continue to respect that precious tradition of what every single egyptian can

contribute to the future of their country, where people of different faiths will be standing together in fellowship, then they can bring hope and healing too many communities in egypt -- to many communities in egypt who need that message. as we look to the future, not only in egypt, not only in the newly free and democratically- seeking states of north africa and the middle east, but far beyond, we will continue to advocate strongly for religious freedom. this is a bedrock priority of our foreign policy, one that we carry out in a number of ways. earlier today, the united states did release our annual international religious freedom report. this is the fourth time i have had the honor of presenting it. it comprehensively catalogs the official and societal restrictions of people around the world face as they try to

practice their faith. it designates countries a particular concern that have engaged in or tolerated -- countries of particular concern that have engaged in or tolerated particularly severe violations of religious freedom. this report sends a signal to the worst offenders, that the world is watching. it also provides information to help us and others target our advocacy, to make sure we reached the people who most need our help -- we reach the people who most need our help. in the obama administration, we have elevated religious freedom as a diplomatic priority. together with governments, international organizations, and civil society, we have work to shape and implement united nations human rights council resolution 1618. it seeks to protect people under attack or discriminated against because of their faith. we raised these issues at the

highest levels of international settings. i personally have discussed religious freedom in every region of the world, sometimes over and over again. we have appointed our first envoy to the organization of islamic cooperation. we have launched a strategic dialogue with civil society, in which we collaborate with liver disease is leaders -- with religious leaders to promote religious freedom, a conflict prevention, and mitigation, and development center-religious dialogue. it includes a foreign policy working group that has provided concrete recommendations on how we can strengthen our approach to religious freedom and engagement with religious communities. beyond the policy, we expanded our assistance to individuals under attack -- beyond diplomacy, we expanded our assistance to individuals under attack because of their beliefs and to human rights activists working in hostile environments to promote religious freedom. these men and women are doing vital and often dangerous work with great courage.

we are proud to stand with them. as part of our human-rights dialogue with china, for example, we have taken chinese officials on site visits to see how religious organizations in our country provide valuable social services. we organize a visit to a catholic charity that provides help to people within -- with intellectual disabilities, an organization that fights discrimination against arab- americans, and more. we are also taking the message of tolerance and inclusion to young people. a few years ago, and rosenthal -- hannah rosenthal and our special representative to muslim communities attended a tolerance summit together. it came away with an idea. they began asking and people to pledge to spend just one hour -- asking young people to pledge to spend just one hour working with people who do not look like them or play like them.

jews were encouraged to volunteer to clean a mosque, islam's to help elderly christians get to church, -- muslims to help elderly christians get to church, and other examples. it has elicited commitments from young people are around the world to spend tens of thousands of hours walking in someone else's shoes. it has even become one of the london olympics official initiatives. it is something that we all have a responsibility to do. seven years ago, when i was a senator, i spoke at a dinner on religious liberty. i challenged everyone there to think of ways we could personally for their religious freedom. including, in the words of eleanor roosevelt, "in those small places close to home." i said it was up to each of us to ensure that our nation, which has always been an exemplar of religious freedom, continues to be.

our mission is important -- is as important today as it has ever been. the united states was founded amongst others -- founded, amongst others, by people fleeing religious persecution, who dreamed of a place where they could live according to their beliefs, without fear, without shame, without the need to hide. today, we are that place. with all of our challenges, there is no doubting the importance of religion to the vast majority of americans or to the fact that people of faiths and people of no faith live in america openly and at peace with each other. the religious life of our nation is vibrant and alive. that has been possible because

of our citizens' capacity over time for tolerance and respect. but also because of the work of our government, all three branches, to uphold our constitution, to take extraordinary care not to favor one religion over another, and to protect equally the rights of all. this has required perpetual vigilance an effort -- and effort. we all know there have been clashes and stumbles and vigorous, impassioned debate along the way. we are still searching for and moving toward that more perfect union. of course, we like any non- divine entity are not perfect. but we should be proud and grateful for the wisdom of our founders and for the diligence of those who came after to protect this be essential freedom -- this essential freedom.

it is rare in this world, but it should not be. people are not asking for much. they just want to worship their god and raise their children and make their homes and honor their ancestors and warned their loved ones -- and mourn their loved ones in a way that speaks to their hearts and reflects their beliefs. what could be more fundamental to human dignity than that? that is what religious freedom makes possible. that is why the united states will always stand for the value, the principle that religious freedom represents, not only for us, but for people everywhere. it is not only about you that we

enshrined in our constitution -- only a value that we enshrined in our constitution. we know from long experience it goes right to the heart of the stability and security of so many countries in the world. in this injured-connected world we live in, that means -- inter- connected world we live in, that means it affects the stability and security of the united states of america. thank you for understanding the importance of this about you and principal -- of this value and principle, and i hope for seeking ways to continue to further it, protect it, and spread it. thank you very much. [applause]

now i think we will maybe take a few questions, and jessica? in no particular order -- here come the microphones. >> thank you so much, madam secretary, for what you do in the world and for the united states. i am egyptian american. thank you for caring about egypt. i am the founder of a democracy for egypt. my question to you, madame, is not only the question in egypt -- i don't know if you read the last report that the change for egypt is asking president morsi right now that he is not delivering what he promised in forming the new government.

you mentioned that you will be observing closely and if there would be steps taken. if you could enlighten us on what is next. thank you so much for your effort. >> well, thank you, and let me start by saying that i do recognize that a democratic transition is a complicated one for any country, and in all to humility, it took us quite some time to get it right, to include all of our citizens, starting with african-americans and women and truly fulfill not only the letter of the constitution, but the aspirations of our people. as i monitor what is happening in egypt, i am conscious of how challenging it is to get off on the right footing, to be absolutely clear what your principles and values are.

as you are aware, and there was certainly a very concerted effort by the president and the freedom and justice party and others associated with it, including the muslim brotherhood, to make commitments about the kind of inclusive a tip that the government would represent, the respect that all egyptians would be held in, and the protection of the rights of all egyptians. now we are waiting to see how that gets translated into action. we are certainly aware of the forming of the new government, with the announcement of a new prime minister. we are waiting to see who is in that government. that will be an important step along the way. we are looking for ways to support the government,

particularly in fulfilling the economic aspirations of all egyptians. but we are going to judge by actions, not words. and the actions the actions are really just at the very beginning stages. it is important to make absolutely clear to everyone that we're not supporting any individual party or any individual. there seems to be a view on the part of some that we are, but that is not the case, never has been the case. we have supported a transition that we hope as lead to a democracy, which, as we have made clear, is not just about elections. there were mistakes in the past, and some of the ways that we shorthanded support for democracy in our country, let's

have an election and democracy, and maybe we never have to have another one. one election, one time. we don't have to be held to any standard as to how we continue to reach out and respect people. i have made it very clear that that is not the case. an election does not a democracy make. we are emphasizing the independence of the press, freedom of religion, the kinds of things that we have learned over many years of practice of what sustains a democracy. as egypt adopt a new constitution, as it votes again for parliament, as its government takes office, we will see a recognition, a commitment to what we view as essential for democracy to be sustainable.

now, am concerned that respect for religious freedom is quite tenuous. i don't know that that is going to quickly be resolved, but since 2011 and the fall of the mubarak regime, sectarian violence has increased. attacks on christians and muslims, sectarian violence, from both communities, has cost lives. we don't think there has been a consistent commitment to investigate and applied the laws equally to the perpetrators of such violence. that it and sends a message to the minority community in particular, but to the larger community, that there is not going to be any consequences for acting out one's own religious

prejudices or social and securities. that is the kind of recipe that can quickly get out of control in terms of conflict and also undermined the new democracy. i am urging the egyptian government at all levels to respect the rights of all egyptians. and i am urging those who are concerned, not only christians, but also moderates, liberals, secularists, to organize themselves. this is something that i started talking to the tahrir square veterans about shortly after the fall of mubarak, that it has been my experience that when democratic space opens up, when freedom opens up and authoritarian regimes are falling, those who are unorganized will not be successful.

how is that for a profound statement? [laughter] but all too often, people who are in the moderate liberal world that don't have the same commitment to organization and follow-through that those whose beliefs are so certain that they know exactly what they are going to try to achieve. there is the religious dimension, at the constitutional inclusive of the dimension, but there is also the political dimension. in a democracy, you have to get out there and work to elect people who represent your views. otherwise, you are going to be sidelined. it is my hope that as we judge

egypt's leaders by their actions, egyptian activists really get more focus on how to influence of the government themselves. i know this is a long haul, but that is the way democracy works. it does not happen overnight. oh, my goodness. [laughter] i don't know, jessica, you should be calling on these people. this young man in the middle, in the striped shirt. >> very lucky to see you here. >> thank you. >> religion sometimes mixes with other issues like terrorism. the terrorists, the separatists, mobilize supporters. how to protect religious freedom and counterterrorism as well as a counter-separatism?

thank you. >> that is an important question, because oftentimes when we talk about religious freedom, there is a tendency for people to worry about the free exercise of religion somehow supporting terrorists and separatists. i have almost the opposite view. i think the more respect there is for the freedom of religion, the more people will find useful ways to participate in their societies. if they feel oppressed, if there is not that safety valve that they can exercise their own religion, they then oftentimes feel such anger, despair, that they turned to violence and become extremists.

now, there will always be people in nearly every society who are going to believe that god is talking right to them and saying, you know, what you really need to do is overthrow the government, what you really need to do is to kill the unbelievers. there will be people like that. but we're talking about organizing society for the vast majority of people, having people who exercise their religious beliefs lawfully, protected by the law, and people who engage in violence, harassment, intimidation, or other antisocial criminal behavior are punished by the law. but one should not be punished or harassed merely because of who one is or what one believes, unless their actions associated with that. that often is difficult rub in many areas when we talk about religious freedom.

you know, it is not just religions against one another. it is even within religions -- within christianity, within judaism, within islam, within hinduism. there are people who believe in their version of that religion is the only right way to believe. in some of the countries we are most concerned about that are majority muslim countries, it is intimidation and violence against muslims who are in minority sects that we must worry about. we watch for many years the conflict in northern ireland against catholics on one side and protestants on the other. i think you are right that there always are issues about terrorism, separatism.

but those should be dealt with under the law without infringing on the rights of people whose religious beliefs are different from the majority. i hope that governments can begin to make those distinctions. it is not only important to do because you don't want to breed extremism, which you can do by cracking down on religion, especially if it is associated with the different ethnic group or tribal group, other identifying characteristics. but it is also because if you are not careful, people will feel that they are in a life or death struggle to protect their religion in the majority against the minority. i remember going to bosnia after the end of the war in bosnia, and a woman telling me that she couldn't believe the hostility she started to feel from her

neighbors. she said to a neighbor, "why are you behaving like this? we have known each other for many years. we went to school together, we went to weddings, we bury our dead together. why are you treating me like this?" the answer was, "because we were told if we did not do that to you first, you would do that to us." if the government doesn't step in and say, no, we are not going to let people be acting this way, we are not going to let them be discriminating, we are not going to let them be harming others on the basis of religion or any other characteristics, but focusing on religion, they can get out of control of any government.

as we know, governments and sometimes stoke religious discrimination for their own political reasons. you have problems at home, the economy is not doing well. let's go find an enemy, let's go find people who are over there. they are of a different religion. that gets everybody excited. you like a match and you cannot put the fire out. we need to be thoughtful about sorting out the problems posed by extremism and terrorism from legitimate religious differences that should be tolerated, respected, and protected. >> we have time for just one more. may i ask you, when the secretary is finished answering this question, to stay on your -- [unintelligible] >> jessica, why don't you call on the last person?

>> i am serving as the general counsel of the american egyptian strategic alliance, working to bring together egypt and the united states in a stronger alliance. one of the things we been talking to the egyptian government about is this issue of religious freedom, and we told them, look to your left, meeting places like jordan, lebanon, and palestine, where muslims and christians, particularly in palestine, have lived in peace for centuries. i am wondering if your conversations touch upon that. look to your fellow arab countries, where it is not a problem, frankly. just a quick follow-up question. i appreciate your emphasis on america, but we also have our problems here with respect to, of course, is, phobia, which i am sure you are aware of. i'm wondering if you have comments about his recent activity in, targeting one of your own aides. >> well, on the first question,

there have been disturbing recent developments with christians being attacked and driven out of iraq, christians in syria feeling like they are really going to be at risk, almost regardless of what develops in the terrible conflict that is now raging. christians feeling that they are under pressure in lots of places in the middle east, where, as you rightly say, they have lived for centuries it side-by-side. i think it is quite important for us to unpack that. why is it happening now? what is it? of course, it is a new political identity, it is an effort by islamists primarily, although not exclusively, to claim a democracy and see how it fits within their pre-existing from works of belief.

there's a lot of attention and concern going on right now across the arab world, particularly in places where christians have lived and would love to continue living. has several questions in egypt told me, our people have been here and i can trace my family back to a thousand years. i love this country i want to be a part of this country and i want to help build this country. i just hope i will be able to. it is at this point that leadership is incredibly important. leaders have to be active in stepping in and send messages about protecting the diversity within their countries. frankly, i don't see enough of that. i want to see more of it, i want to see more of it.

we did see some of that in our own country. we saw republicans stepping up and standing up against the kind of assaults that have no place in our politics. we have to set an example, there is no doubt about that. we have to continue doing so. but we also have to expect other leaders to do the same. when i think about how scared so many minorities, religious minorities are all over the world, and governments -- i believe that governments have a bigger role to play and leveraged than they exercise. to many governments, particularly in these fast- transitioning societies, when there is so much going on at the same time -- too many governments believe their religious freedom is something you get to after you deal with everything else.

it is just not a priority for them. we want to raise it up on the visibility list of what they need to be dealing with, and to try to send a clear message. you need to stand up for the rights of your people. you are a leader of a diverse society. if you are in a rock, you need to be protecting every community, not just one or two at the most. if you are in lebanon, you need to be standing up for every community. similarly, in egypt, pakistan, indonesia, china, india, and where, leaders need to be out front saying that an acting on a. i am hoping that we will see more actions that move in that direction, and the united states will continue to push and prod and persuade and, if necessary, look at ways to use consequences that can send a very clear message that we believe you will not be successful, you will not be

stable, you will not be secure, you will not have a sustainable democracy. let me add one other thought about this, though. in some societies, what we're seeing, going back to the young man's question -- terrorism, separatism, and religion -- there can be as fertile ground if the government is not paying attention to all the needs of the people. we also are going to have policies that, if you are living in northern nigeria, you will see more development so that you do not only see -- take on the security front, but take it on the economic development front.

there are lots of ways to try to knit this together. it is probably the most exciting time but the most daunting time to be a leader in the world right now, especially in these new transitioning democracies. there are just so many high expectations that will be so difficult to meet. stand for principles, stand for values, and lead them to the space they should have to exercise the most precious freedoms human beings should have gone are regardless of who their leaders are. the united states will stand ready to assist them in any way possible. thank you very much. [applause]

>> tuesday, a discussion about negative campaigning and what we have seen this year with the president of the campaign media analysis group. then, the center for democracy and technology on cyber security legislation being considered in the senate. baker, a look at how the american public feels about big business. the president of the public affairs council gives his assessment. washington journal, live every morning at 7:00 a.m. eastern on c-span. >> tuesday, the senate foreign relations committee, here's some the ambassadorial nominee to afghanistan and pakistan. james cunningham has been nominated as ambassador to afghanistan and richard olsen has been nominated to be ambassador to pakistan. see it live starting at 10:00 a.m. eastern here on c-span. starting at 10:00 a.m. eastern here on c-span.

>> we did not begin as a city in kentucky. there was only a vague american region and then later a county and another state called kentucky. but we began in 1778 as virginia. >> saturday at noon eastern, literary life with the tv on c- span 2. biographer john david died on mitch mcconnell. and author jason gamus. also, the heyday of the steamboat on the ohio river. take a look that on the bill of louisville.

explore the history of literary life of cities across america. this weekend, from louisville, on c-span 2 and c-span 3. >> the white house drug control policy director said that cocaine use in the u.s. has declined 39% since 2006. his remarks came during a discussion on obama administration efforts to combat drug trafficking in the americas. the white house shifted its drug control strategy to focus more on prevention and treatment and less on law-enforcement in 2010. from the center for strategic and international studies, this is one hour. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> good morning. if we all could take our seats. i would like to welcome you. i am the director of the americas program. it is great to see this turn out on a monday morning. we have a special guest and a

compelling program. it is a privilege to bring this program to you here today. before we get started, a couple of administrative details. please turn your cell phones to vibrate mode. during the question and answer session, i ask that you raise your hand so that one of our staff members can get a microphone over to you so that we can all hear the question that you have are the brief commentary that you may have. when you do speak, it could you please identify yourself and the organization that you represent? before we introduce our guest, i like you to think about the frame of reference is we have in dealing with narcotics. in 1970's we started talking about the war on drugs but we do not often talk about the war on crime which as been with us

since the beginning of recorded history. we understand this is a management issue. i would ask you to keep this in mind as you hear director gil kerlikowske's words. i have asked csis' director to do the introduction today. he has been the assistant secretary of state for international narcotics and law enforcement affairs from 2007- 2011. ambassador johnson, would you do the honors? >> it is a pleasure for me to introduce gil kerlikowske. he is a colleague and a friend. he is the director of the national drug control policy

which makes him a responsible for coordination of all of our nation's counter narcotics policies and makes them the coordinator of a diverse range. he is a career in law enforcement officer having grown up in law enforcement in st. petersburg and subsequently served as the commissioner of police in buffalo and was chief of police for nine years in seattle where he had an extraordinary record of lowering crime and engaging with the community. it was my pleasure to work with him here in washington and to be coordinated by him. he brought a new breadth of leadership to his position. he had one of those signal achievement of a great leader.

he brought a lot of great people with him and imagination to the position which is really impressive. it is my pleasure to welcome to the platform here. [applause] >> thank you. good morning. it is a great pleasure to be back. it is really wonderful to be introduced by a person i have a lot of admiration for in the very difficult task he undertook and also the leadership steven provides. i really very much appreciate the opportunity and relationship. csis is an important leader. i am delighted to discuss with you the work of the obama administration. i have some information to stare with you about cocaine

production. i want to take a few moments and talk about the state of drug policy. last month i had a wonderful opportunity to lead the american delegation for the international conference on the global drug problem. it was hosted by the president and there were 500 individuals. i joined the delegations from five continents to share america's approach to drug use and to hear about drug policy in other countries and to discuss it at length. what are the obstacles each country faces? what is the best path forward? as i sat with leaders of more than 60 nations from across the globe, i realize our areas of agreement far outweighed our differences.

we were all united in the ensuing drop policies that are balanced and realistic in the focus on the public health and the safety of our citizens. there is considerable discussion here and in latin america about uruguay's a move to legalize marijuana. the statements would have suggested the worldwide legalization was a foot. it was not clear what kind of telling the summit will take. the problems caused by drought in latin-american are frustratingly complex. -- by drugs in latin-america are frustratingly complex. the public discourse on these issues drives around the simplicity of sound bites.

a drug problem is complex. it requires a complex solution. i was pleased to see the world leaders agree on a three- pronged approach. although it does not lend itself to sound bites, it is holistic, it is nuanced, and it is a strategy that will be affected. institutional support for alternative development is critical. on a number of trips i had the opportunity to meet with many people who have been engaged, whether it is in fish farming or working in other alternative crops. the success has been amazing. in not only reduces the amount of drugs coming out of latin america but in shores they -- but ensures that farmers who make their living from illicit crop production have a viable alternatives to support their families. these farmers have to be protected as they grow alternative legal crops. that is why this administration has devoted nearly $1 billion to alternative development

programs during the last three years. they provide economic incentives, increased security to farmers. the global drug policy community is committed to reducing the supply of drugs but our geographic focus is not limited to latin-american. the united states was in nevada trying to disrupt the flow of cocaine to europe. -- the united states was in ga hna trying to disrupt the flow of cocaine in europe. because we know criminal organizations will exploit political rest and vulnerable countries, we have to be nimble

and our response. another reason it cover the evolution of the drug countries other countries were thought of as transit companies. they are artificial distinctions. drug-trafficking pays their networks and drugs and not in cash. drug consumption is of great concern. it strains the public health services in these nations that are all too often ill-equipped to help people who need treatment for addiction. the third prong of the global approach is reducing the demand for drugs. that is an important part of the administration's strategy. i know you have read the 2012 strategy and probably have your copies with you. they are still available. the president requested more money for treatment and prevention programs that he did for u.s. law enforcement. it is a fact often overlooked. we have spent $31 billion to support drug education and treatment programs. we're told that the united states and europe are the only areas where drug consumption is a major problem. in the united states we are

engaged in an unprecedented effort to reduce the drug consumption through prevention treatment and recovery programs. we routinely see evidence of this where the problem has not been visible before. latin american countries have their own drug use. just before the summit in peru i visited guatemala and visited a drug rehabilitation center. the women in the treatment center were from all over the country. only 12 women were able to stay there. the price of treatment was $200. it was a small but sent to meet -- a small attempt to meet a public health need that is not confronted by national borders. in many cases the women treated

had made enormous sacrifices to be there and their attempt to find treatments have been woefully ltd. before they -- woefully limited before they arrived. my point is drop consumption is not a european or u.s. problem. it is a growing social problem in places we want mistakenly called transit countries. as we look for solutions to the global drug problem we must understand and recognize that the united states is not only capable of exporting helicopters or training narcotics units. we lead the world and evidenced based treatment. we do export acknowledge. through the initiative, we are helping to create safe streets in latin america and support democratic institutions. casri funding also goes to programs for use to provide healthy alternatives to substance use.

during my trip to guatemala i visited a youth drug prevention program. it was built on the framework of a u.s. program and developed into a program that reflected the culture in guatemala. the combination of american expertise and the cultural influence created a youth program suited to the needs of that country's young people. by exporting u.s. expertise and encouraging partner nations to make partners of their own, we can retreat similar programs in -- we can recreate similar programs in countries where drug use is increasing. this points to one conclusion. the drug control community must find ways to work together and increase our cooperation. both in cutting the supply of drugs and reducing demand for them. i am pleased to report there is

a significant amount of international solidarity on this matter. i told you i did have some good news. while there is more work to do, multiple across the board indicator showed that both cocaine production and u.s. cocaine consumption are declining. new estimates show in 2011 cocaine production in colombia dropped 25% from 2010 and 72% from 2000 to 01. -- from 2001. potential production of pure cocaine is down, the lowest production potential level since 1994. it is the first time since 1995 that columbia is producing less cocaine than peru or bolivia. what about our own consumption? since 2006, cocaine use has decreased.

by 39%. fewer arrestees are testing positive for cocaine. all 10 of the site across the country where this is tracked showed a decrease in 2011 compared to 2003. let me add a little context. it did not happen overnight. there is a sustained effort for nearly a decade. steady pressure across more than one administration in both of the united states and in colombia. it did not happen to the efforts made by the united states. this is a partnership by the united states and colombia. it was the result of a balanced approach that involves a these integrated steps. the results are historic and have implications not just for the united states and the western hemisphere but also

globally. the security threat we face in 1999 is gone. it has been accomplished without offsetting results elsewhere. we do not just have a safer columbia. -- colombia. we have a vibrant colombia. colombia is committing its own resources to help its neighbors for your information exchanges and regional leadership. these lessons provide a model for dealing with challenges they're out the world, -- challenges throughout the world, particularly in central america. these numbers should not distract us from the fact that transnational organizations are clearly a threat to civil

society everywhere. we have seen that in our southern neighbor of mexico. the administration contends the gruesome drug-related violence. it is committed to partner with the mexican government to disrupt the cartels that commit such brutality. these pose a significant challenge. they do not just prey on citizens but they diversify through drug trafficking, sex - - through human trafficking, sex trade, corruption, and terror wherever they operate. they are in the business for money and power. there is no limit to the schemes they will employ to extract illegal proceeds. in interview with pbs in may, the head "once the dominating cartel establishes territorial control it turns to the most probable part of its business, -- the most profitable part of its business, selling

protection. kidnappings, piracy, sale of organs, prostitution, and they will turn to anything illegal that makes money. the profitability of drugs is quite low compared to the profitability of these other areas." the united states take our response ability to dismantle organizations operating within our own borders very seriously. last year united states law enforcement agencies dismantled 612 drug-trafficking organizations that were on the attorney general target list. that focuses on a major drug- trafficking organizations that operate in our own country. we have interagency task forces operating in every part of the country to disrupt a major drug-trafficking distribution networks within the united states. we welcome the dialogue on the best tactics to address the threat posed by transnational criminal organizations. we recognize it is appropriate to continue to examine what

works best. transnational criminal networks would not disappear if drugs were made legal. these organizations do not derive all of their revenue through drugs. they would not simply disband if drugs were legalized. institutions like csis play an important role in developing a rational approach to the international drug is you. -- drug issue. too often we continue to face this polarized debate. this administration is committed to the way forward. legalization is not a policy nor is locking every offender up. our focus is on the science of addiction and tackling the international security challenge posed by transnational criminal organizations. there is not a simple answer to

the global drug issue. it is complex. it threatens the security of people everywhere regardless of their citizenship. i am grateful for the opportunity to provide some insight into the landscape. thank you very much. [applause] >> now we come to that part of the program where we have questions and answers. if you have a question, raise your hands. we will get a microphone to you. keep your question shore so we have time for more than just one. i think we had one go up here. you are next. >> i am a retired economic analyst who graduated from college before marijuana showed

up on campus. i was interested in drug policy when i went to grab school a few years later. it was pretty clear that marijuana is not more dangerous than alcohol. we know it is a far less dangerous drug and alcohol or tobacco. those two drugs are killing more than half a million americans every year. the number of marijuana deaths is so low it cannot even conduct studies. you're sitting message to our -- to oursending a message kids that the only drug we need to worry about is marijuana. i think that is a tragic mistake. >> we have a comment? >> i think we concentrate on a wide array of drug issues. we clearly do not try to prioritize which is more dangerous than the other.

it is a huge mistake to think that marijuana is a benign substance. it clearly is not. legalization is not an answer. when an illegal substance becomes legal we know that the use increases. it is not like the country is equipped to deal with the number of people that have alcohol problems and suffer from the effects of nicotine. i do not think we're in the position to take care of the people who become addicted to marijuana. we also do not think that locking everyone up is an answer. we do not think there is an end in sight. the officers in seattle that reduced time for their work --

reduced crime through their work never thought they were going to work themselves out of a job. legalization is not going to solve our drug problem. >> good morning. we offer our support as an organization by the 34 offices in the different countries to support every initiative of the government to improve the view of this problem. we are very worried about the actions in every country. we are in a better situation to support every initiative that

you are trying to go ahead with. >> thank you very much. the public health approach is clearly critical and important to dealing with this problem. thank you. >> we have one here. >> i am mark schneider. thank you for the presentation. i think one has to step back and ask, given an optimistic presentation, why is it that most of the latin american heads of state were not convinced and have not been convinced and were quite critical of the current drug policy? many of the previous head of state in the blue ribbon panel similarly had questions. i think the questions go to each of the three areas.

they do not see alternative development. as sufficiently comprehensive in dealing with the poverty there thus. on the question of drug production, they see the balloon effect. there has been a rise in peru and bolivia. it averages between 180, 000 and 210,000 in cultivation. the third is in terms of what you are discussing which i think is quite important. it is the question about how you deal with the crime problem you see in mexico right now and the rising violence there. would it not make sense for the u.s. government to support something similar to what latin-american as did?

an independent panel that would provide an independent view. an independent review and study that would present their findings to the u.s. government. >> there is a lot there. a couple of things that are important. the oas is taking on this issue. this administration has never been shy about engaging in debate. the president and vice- president have made it clear where they stand. -- where they stand on

legalization and decrimin alization. what is missed particularly the in mexico is that oftentimes people want to use colombia as as a template. they're well over a decade in making these changes. if the numbers that are holding now, showing the reduction in violence, it gives some proof that this is not happen in a quick fix. americans are very happy to solve every major problem in 30 minute television show. we want quick answers. i do not think when it comes to taxes or the fact that when i listen to the 61 representatives of the country, people still in office, they are responsible for the safety and security of the people they represent. i did not hear any appetite for legalization.

>> good morning. thank you for your remarks. i wanted to dig a little deeper on what you said about alternate development and the solution. one of the things that came out of the work in colombia is that in order to be successful you needed security in these regions to even promote development to get crops to market. the success of colombia was a security environment. how do you as a coordinator create the enabling environments if the goal is to reduce stress? -- to reduce drugs? you need these kinds of stable areas first. i was interested in pursuing

that. >> from a long career, almost four decades, you did not change the level of crime unless you first that safety and security going into it. then it was the people themselves that felt more safe and more secure that made the changes that were necessary to save the crime was not welcome and drug dealing in our neighborhoods. that is a historic pattern of the violence and crime reductions that have occurred here in divided states. -- in the united states. i think that pattern with clearly called in alternative crop. in talking to the people there, the family members were so pleased. there was safety and security. at times they said they have less money in their pockets, the fact that they could take care of their family and the state and security and the crop would not be taken by the

government made a huge amount of difference. we work very closely. the best example is the colombia national police. i am very heartened by what i have heard about mexico. the retired general is a key adviser to the new incoming president. i think we want to be a strong partner of safety and security. and then moving forward on these other issues. thank you. >> you highlighted the success that colombia has seen in reduction of cocaine. what could the smaller nations of central america learned from the colombian experience?

is there a danger that some of these countries are taking a heavy handed approach that might backfire? >> rather than speak about each of those countries with a different perspective, i think a couple things are worthwhile in colombia. the citizens were taxed at a level that they were able then to provide the infrastructure and security that made a huge difference. when you listen to president calderon's speech at the library of congress, these countries could make the important indication that is needed to infrastructure and reducing corruption.

it is really the foundation for this. i do not have sufficient detail about is the approach heavy- handed or does it violate human rights. in talking to a number of people in a variety of my trips, the protection of people and human rights has been something they have spoken to me about that they are quite proud of in many ways. >> we have one year and then we are going to start working our way over to the other side. >> thank you for your talk. you mentioned that since 2006

the number of cocaine users has declined by 39%. what part of that is due to government efforts? many people know an epidemic crested and people quit because they realize top awful it was. how much of that was due to government efforts? >> if i knew the answers to that i would become a highly paid consultant. i think it is two parts. one is that clearly reducing supply is incredibly helpful to reducing the demand here in the united states. when the product is less pure or difficult to obtain, that is important. it is not just in colombia. the second thing i think is important has been the educational efforts that are often not given the credit to help reduce that level of

consumption here in united states. i have spent a lot of my career in the african-american communities as several large cities. you can understand that their neighborhood word of mouth, information, devastation that cocaine caused, crack cocaine was not anything that people were interested in. they would very much move away from it. i think it really talks about this balanced strategy they have to educate people. you also have to provide treatment resources. people recover and go back to their families and being productive citizens. you have to do the enforcement. if you were to ask me what actually had the most impact, i would not have that answer.

>> in the center. >> i am a master's student at georgetown. speaking of your remarks of the general view is an adviser. have your office been in contact with anyone from the new administration in mexico? how do think that opinion will change the drug were there or policy in that country? quite since he does not take office for several months and many of these things are still forming and there are lots of places within the bureaucracy of the united states government from the department of state to national-security staff that are involved with this, i would only tell you that from all of the statements that i have read in everything that i have heard,

i am very encouraged. they will continue to look at this. the president calderon has said that these cartels can often replace legitimate government. he told me specifically of one time. he told me there is a strong reason for me to take this. the people of mexico elected people and i have appointed people to run this country. he said drug trafficking organizations and criminal cartels have no business trying to run the country. in my estimation he has been incredibly courageous in taking them on. his life has been incredibly strategic about making drug prevention and drug treatment a signature effort during her entire time as first lady. >> lady in the yellow dress all

the way in the back. >> some people in colombia the violence takes precedence. how do you get cooperation with colombia? >> the first part in recognizing the reductions in the forces and what has been done to them is important. they are certainly able to operate as criminal gangs can operate in some of our locales throughout the united states. the fact that the law enforcement initiatives have been so well structured and thought out in the training and the equipment is particularly

important. it is probably inappropriate for me to comment on president santos and the relationship of colombia other than to say i think there are a number of countries admire what has occurred in colombia from a safety and economic standpoint. the presidents have major trafficking important efforts along with the fact that they have also clearly embraced so many community-based organizations. we have representatives that are here that have spent inordinate amounts of time saying here is what we have done to strengthen bill local communities to reduce --

strengthen the capacity of local communities to reduce this problem. >> thank you for those inside for remarks. i am with community anti-drug coalition of america. it is a strategy that is about 30 years old certified by the united nations. for the last six years we have been working in countries to build community-based, multi- sector organizations. the recession has been unbelievable. colombia has been one of the real success stories. we're also been to brazil, el salvador, you name it. we're now working in asia and

about six countries in africa. my comment is the demand strategy when embraced at the community level is having a tremendous impact. we are about to have an evaluation that has gone on for the last two-years in peru that says when this is in place you can reduce not only consumption but also crime as well. my hope would be that the u.s. would continue to have a very strong demand perspective in this policy both domestically and internationally. >> thank you. i think president obama's dedication to community building and strengthening community applies not just here but worldwide. thank you for the work that you all do. >> i think we have a question directly in back of our last questioner.

>> i want to thank you for your remarks. i have a two-pronged question. cocaine use has declined 39%. had you noticed increases in any other types of drugs? when you take a result of that, the decrease in cocaine with the increase of other drugs, has there been a decline overall? >> it is always frightening when someone has a part a and a part b. [laughter] spoken as a true diplomat. i think it is important to recognize a couple of things. in the last 30 years, drug use generally across the nation has

declined in the united states. the fact that we have had some increases in the last couple of years is important to recognize. i do not know if the research supports people moving away from cocaine and then say i am going to do something else, especially when it comes to our prescription drug problem in this country. prescription drugs are not coming across any border and take more lives than cocaine and heroin each year combined. it has been a bit of an unrecognized problem until the past three years when we have tried to highlight it. we have tried to reduce prescription drug use. switching from one drug to another does happen. we are concerned about people who are addicted to prescription painkillers, moving

to heroin. that information is antidotal. we have to watch it carefully. there is one very important thing, prevention, giving people the tools and information of what they need whether it is through the media or role models and parents. it goes along way. it is a lot cheaper. >> over here and the gentleman over here. >> she mentioned the consumption side of cocaine. i am interested in the production side. i think there's evidence that drug cartels are switching to easier produce drugs such as methamphetamines. i'm wondering what role that would play in production. >> our methamphetamine use is down by almost 50%.

i think that is important to recognize. the point that you raised is that these cartels will continue to make money. there will continue to find new markets, whether it is in the most economically deprived countries are countries in which countries seem to be doing better, australia being one that is talking about their on consumption problems. they are very smart criminals. they have been able to not worry about borders or language or the evaluation of any particular currency. that is why it is important for us to recognize that this is a problem about safety.

it is also a huge public health issue. we really haven't been that good at using the public health part of this issue. >> it would seem that one useful measure of the success of addiction efforts would be the median street price of a particular drugs in the 10 or 20 or 30 largest cities. is that kind of data being collected? what does it look like. and in constant dollars so you don't get an inflation effect. >> of the drug enforcement

administration looks at both purity and price per pure grain in particular. this leads me to have some concern. this is the only measure that is needed about how to look at the drug problem and what we are facing or what we are doing. i think the more important thing is to look at this holistic play. -- look at this holistically. the economists only use the g.d.p. are only one data point to tell you how the economy is doing. we have that information. i'm happy to provide it to you. >> a question right in front. >> thank you. i am at the ambassador for

costa rica. thank you for your report and your openness to receive the ambassador. you have been remarkably communicative. i appreciate that. i want to refer to the majors list. as you have pointed out now, the lines between production and transient and consumption have -- and transit and consumption have become increasingly blurry in the whole world. i am wondering if there is any chance that we can approach the day when the majors list will in fact be eliminated. it may become irrelevant. it is certainly harmful to our countries to have been punished

by the success of in colombia and mexico. i know you understand this whole issue very well. where do you think this process is going? because it affects our promotion strategies. >> the ambassador raises a point on the majors list. it is something that is required by the president by law to do on an annual basis. it is a fairly narrow definition of some of the issues surrounding the drug problem and the infrastructure of these particular countries. there is no question in my mind, having met with you and your colleagues on several occasions, that the majors list causes considerable angst. i think it is well worth us being able to continue the

dialogue and talk about where that should lead in the future. >> right to your right. then we have one in the back. >> i am from the institute of world politics. i was wondering if you could comment further between the connections between international terrorist organizations and the drug cartels, how they are learning from each other and what the policy on that is. not specifically just with colombia or mexico, but even down farther south in the smuggling areas and some of the deeper latin-american countries. >> i think it is important to recognize that terrorist organizations need the fuel of money in order to operate or

further their particular gains. it was important now that a little over a year ago the president released a transnational crime strategy that talks about this. i believe that for too long we have only talked about drug- trafficking organizations as a very narrow viewpoint about this particular problem. what has become even more here is how organized crime groups - murkier is now organized crime groups make money. and how much of that money terroristrd funding organizations. the difficult problem we have in the united states is that we have a very antiquated system of counting crime. we know how many bicycles were stolen last year in the united states. we do not know how many people

were the victims of identity that. if we do not know how many people have their debit card tapped. i am sure that never happen to anyone in this room. we do not know where the profits have gone, whether it is to feed a group of people that may be using methamphetamines and a rural part of the united states or whether some of the profits may go to funds a terrorist organization. i think the crime strategy which brings the government approach to this issue is a great step forward. i think we need to recognize the threat to the global a economy that corruption and financial crimes actually posed to the world. >> right in the middle in the back.

>> i am from the spanish division of boys of america. there has been it congressman sam he consumes marijuana in uruguay. some say they want to distance themselves. -- distance themselves from the u.s. model. we have what is happening in mexico with hsbc. the money laundering in the u.s. there is a lot that can lead to a negative perception. what is the opinion? >> what is really critical is to recognize that what is often seemed as the u.s. models is one of helicopters and models. the u.s. model has only one purpose, to keep these drugs out of the hands of people here in the united states.

that is a real misnomer about the u.s. drug policy, particularly over the past three years. we have done three iterations of president obama's policy beginning in 2010. i do not think he would find a more balanced approach. almost 90% of the world's drug treatment programs are evaluated and the science behind them comes from more done here in the united states. we are happy to export those kinds of real world practical solutions as a longtime police chief getting something done and having doable deed and making sure that it is practicable is critical to me. if you look at the strategy and you look at the three years of changes, i think that is exactly where we are headed.

there is no silver bullet or a magic answer. we have worked very hard to make sure that the united states is not just seen as our only interest is in keeping this out of the hands of our people. really, our interest is in making a healthier and safer world. >> we have time for two final questions. this lady with the dark blouse and then the young man with the dark tie. i guess those will be our final ones. we will take two questions. out.hen we'll close >> you mentioned the mexican and colombian cases. other countries are stronger than the smaller countries. i wonder if he could go into

more detail about what the united states should be doing to work with countries that have far fewer resources and far higher homicide and violence and crime rates right now. >> law enforcement here in the united states and prosecution here is really pretty good. it is reflected in the crime rates, not always in every city. it has reflected a decrease crime which then increases and a lot of other things. those capacity building mechanisms need to be exported. they cannot just be exported by the united states. it has to be exported by countries where there has been success. when i look at the work that's

colombia is doing the rest of the country in showing how the past that could be leveraged in law enforcement could be leveraged in a way that increases safety and security, that is important. the department of justice works very hard to fulfill their obligation when it comes to increasing the ability of prosecutors to be successful. i think these things are important. they do not just always get the level of attention and concern as to when someone is extradited or there is a particularly large drug bust. it takes time. it is hard work. i think there are successes in this hemisphere that can be used as an example. countries with less infrastructure and ability to provide the taxing resources that are needed for security

can benefit from some of them. the end result will still be the leadership of that particular country. >> and our final question. >> students for sensible drug policy. you have said you ended the war on drugs. with respect, you work with an administration that is a resting 1.5 million people annually for drugs. this policy has been pushed on the mexican government which has led to 60,000 deaths there. when have deaths like this, it is still very much looking like a war. when is the u.s. drug policy actually going to end the war on drugs? >> what i've always mentioned is that it is a mistake to call it a war on drugs because it leads itself to a simplistic solution to what we know is a complex problem.

most of the law enforcement in the united states done on drugs is done at the state and local level. it is not done by the federal level. i do not think when you read and listen to these speeches that presidents calderon has given, it is the united states that his administration has taken on criminal cartels. it is going back to what i originally said in his conversation with me. it goes back to represent it is. it does not belong to multi organization groups. >> i want to thank all of you for being an attentive audience this morning. i especially thank director gil kerlikowske for being kind

enough to join us this morning and to have a 40 minute dialogue discussion with you and to flush out the various points of view that we all have and the questions that we have in our minds about the direction of u.s. policy. a big hand for director gil kerlikowske. [applause] >> thank you. >> we have about one our two- minute if you'd like to come up and meet him. i would encourage all of you to exchange business cards. >> tuesday on washington journal, a discussion about negative campaigning and what we

have seen this year with the president of the campaign media analysis group. then we hear from the center for democracy and technology on cyber security legislation being later, a look and how the american public feels about big business. the federal government and lobbyists. the president of the public affairs council give his assessment. washington journal, live every morning starting at 7:00 a.m. eastern on c-span. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> tuesday, mitt romney delivers a speech from warsaw, poland, the final stop on his foreign trip. we will have the remarks live at 6:15 a.m. eastern on c-span2. >> we have to be really clear about the many ways we own ourselves and our history.

and that we make decisions that are history is phenomenal, vital and special. >> the former president of bennett college rights and comments on politics, education, and african-american economic history. this sunday, your questions, calls and e-mails for the author of surviving and thriving three had a 65 blacks -- backs in black history. by noon eastern on c-span2's book tv. >> mathematician an economist steven landsburg at the cato economic summit. he talked about the innovation and economic growth during the industrial revolution. this is an hour and 15 minutes.

>> good morning. i've promised we would begin on time and we are nearly 23 seconds early. so we are off to the right start. a couple of quick points. we will have presentations, presenters will be up here or some place around here. for the discussion, we have to microphones and so if you want to pose a question, come on down here. if anyone had limited mobility, we want to make sure everybody can be included in the conversation. i recommend sitting nearby these microphones if that is an issue for if there are serious problems, we will make sure someone can bring a microphone to you. but i would rather not make that the standard. but again, if you have limited

mobility problems, that is not a problem. our first presenter to get us off to the proper start, prof. steven landsburg. he is a mathematician by training but an economist by profession and passion. he is a great teacher and explainer of economics. in addition to his bio, he has a new edition of his wonderful book "the armchair economist" fully updated for the 21st century with data and update in contemporary examples. he blogs daily at the bigquestions.com. and he is nearly finished with another book, part of his wide- ranging interests, on the theory of relativity. steven landsburg. [applause]

>> thank you. is the microphone working? good. i want to talk to you about economic growth. the story of economic growth begins about 100,000 years ago when modern humans first emerged. then we have the time line here. for the next 99,800 years or so, nothing happened. [laughter] there were some wars, some political intrigues, the invention of agriculture, the renaissance. but none of that mattered. none of that mattered in the sense that none of it had any appreciable effect on the quality of life for any substantial number of people. on the dawn of history, up until about 200 years ago, nearly everybody who ever lived lived right around the subsistence level. the modern equivalent of maybe $600 a year.

there were times and places where it was better than that. even some extremely fortunate times and places where people aren't me be the equivalent of $1,000 a year per day -- $1,000 a year in today's terms. of course there were always tiny nobility's, kings and queens and dukes and princes who lived much better but they were numerically insignificant. if you had been born anytime prior to the industrial revolution, the odds are astronomical that he would have lived on the modern equivalent of $400, $600 or if you were extremely lucky, $1,000 a year, just like your parents, just like your grandparents, just like your children and just like your grandchildren. then a couple hundred years ago, something happened.

incomes, and lease in the west, started to rise. by the year 1800, incomes were rising at about three-quarters of a percent per year. a couple decades later, that happened around the world. then it got better. just 20 years later, income or rising at 1.5% a year. this was unprecedented, this kind of sustained growth. it had never happened before in the history of the world. since 1960 in this country, per capita growth corrected for inflation has grown at about 2.3% a year. to translate those percentages into something concrete, let's think about what that means for a typical middle-class family. suppose that you are a middle- class person with a modest income of let's say $50,000 a year. at that 2.3% growth rate, if we

continue at that rate, then in 25 years, your children will be earning the inflation adjusted equivalent of $89,000 a year. if we continue that growth -- growth rate, their children 25 years after that, will be earning the equivalent of $158,000 a year. that is the power of economic growth. if you extrapolated that out a little bit further, let's say another 400 years at 2.3% growth per year, then your descendants will be earning approximately $1 million per day, unless of course they rise above mediocrity and live a little better. i want to stress that these are not some future inflation ravaged dollars we're talking

about. this is after corrections for inflation the equivalent of 1 million of today's dollars. i do not know if we will ever reach that 0.400 years from now but i do know that conservative extrapolation from a sentry's old trend, it is conservative because it assumes we are going to continue that 2.3% growth rate for the next 400 years whereas in fact what has happened is the growth rate itself has continually risen if you find this an impossible number, you might pause and reflect for a moment on how implausible your lifestyle would have sounded if i had tried to explain it to somebody 40 years ago. you might also meditate on the history of skepticism. in 100 a.d., he suggested there

was no hope for future development. this is the history of per- capita income in the united states. united states is the medium growth country. our growth compared to other countries has been steadier and it has started earlier than most. on average, we are a pretty average country in terms of level of growth. this is all corrected for inflation. this is all to thousand $5. can see that incredible mark of prosperity over the years. -- you can see that incredible market prosperity over the years. we have had some rocky years. this only goes up to 2010. that is the kind of thing that happens from time to time. it happens most spectacularly in the 1930's here we have the great depression. here is what happened -- incomes fell back to where they had been

about 25 years before. people found it intolerable. they had to live the way their parents lived and they found it intolerable. they had to live at the level which there great-grandparents' would have thought -- thought on a manageable -- thought unimaginable luxury and they found it intolerable. that is a new idea. nobody before the industrial revolution thought that. today, we expect our cars and entertainment systems and our computers to keep dazzling us with something new every year. we expect that but the underlying expectation is new. here is something you never saw in the 18th century -- a politician asking are you better off than you were four years ago. nobody asked that because in the 18th century, nobody expected to be better off than they were four years ago. it did not just income. let's look at what has happened

to our ledger time. 100 years ago, the average work week was 65 hours. today, it is 33 to read 100 years ago, 6% of manufacturing workers took vacations. today, it is virtually 100%. in 1910, 26% of 65-year-old men were retired and that is at a time when most men did not make to 65. of those who made it, they were really old. three-quarters of them were still working. today, 90% of 65 year old men are retired. tell labor was common in 1910 -- child labor was common in 1910. today in this country, it is practically unheard of. we are working less per week in fewer hours per year.

the average housekeeper in 1910 spent 12 hours a day on laundry, cooking, sweeping, cleaning. today, it is about 1 hours. here is the typical housewife's laundry day in the year 1910. first, sheep took water to the stove -- she took water to the stock of -- she took wanted to the stove, moves on to the task of ironing using a heavy flat iron continuously he did over the hot stove. the entire process takes about 8.5 hours. she walked over a mile in the process. we know this because the united states government used to hire researchers to follow housewives around as they did their laundry and count every step.

we know from the research studies that doing the laundry required 8.5 hours and miles of walking. by 1940, our heroine has a washing machine and her lawn today is down to 2.5 hours as she walked 665 feet. today, nobody spends 2.5 hours on the launch. you throw the laundry in. if you have a fenty machine, it e-mails you to let you know when it is done. -- if you have a fancy machine, it e-mails you to let you know when it is done. [laughter] in 1900, most houses the not have central heat, did not have plumbing. though other routine tasseled hats -- routine tasks including luging lumber around. the average american has gained six hours a week of ledger.

that is the amount of time we spent in the office are commuting is down by six hours a week. that is the equivalent of getting seven extra vacation weeks per year. that is over the last 40, 50 years or so. so we are getting richer, we are working less and on top of that, the quality of the goods we buy is improving. if you doubt that, go pick up a 40-year old sears catalog and ask yourself if there's anything in there you want to buy. here are a couple of pages from a 40-year-old catalog. you can get this am radio. it weighs 2.9 pounds. one transistor comes with the battery. you could get this black and white camera which takes up to eight pictures. then he replaced the film pack which probably costs about --

about as much as the camera. you by the separate flashbulbs. they come in packs of 12. when you run out of those, you have to replace those. the only thing is these pictures are misleading because you are seeing at the 40-year-old prices on there. we ought to correct those for inflation. those are what the prices are corrected for inflation. $128 for that transistor radio, $210 for that eight picture camera. i guarantee you it takes worst pictures them when you get off your iphone. it is not as electronics. it is products like health care. here is a shocking number -- if you look at the quality of health care in the poorest parts of africa today and if you control for the effects of aids,

there is an argument for doing this and not doing it, but if you say aids is a special one time thing, this is not part of the general trend of health care, so i will take the effects of that out. then the health care outcomes we are seeing in the poorest parts of africa today measured by infrared mortality, life expectancy, anything you want to measure, are almost exactly the same as what we were seeing in the united states in 1975. 1975 in the united states, you were getting the same quality of health care that the poorest african art getting today. now i want to ask you, which would you rather pay -- 19 -- 1975 prices for today's prices for today's health care? i venture to guess there is not an informed person in the world who would choose to go back to 1975. that has to tell you that for all the problems with our system and the hype about rising costs,

health care today is a better bargain than it has ever been. the moral of all that is that increases in measured income, even phenomenal increases we have seen, grossly understates the story of how rapidly the world is getting better. henry viii had a much higher measured income than anyone in this room. he will have of england but i beg you he would get treated half as well for modern plumbing, a lifetime supply of antibiotics and access to the internet. along with all of that wealth we have generated, has come another brand new phenomenon -- wealth inequality. per-capita income in the united states is 70 times what it is in

the poorest parts of africa. the world has never seen in equality on the level before. that is brand new. do you know why the phenomenon is new? because wealth is new. the reason we have all this inequality for the first time is that we have well for the first time and if you think inequality is a problem, it is worth reflecting that it is it leased a tremendously that this problem to have. it is the problem of how to divide up all this amazing wealth that nobody would ever predicted we would be able to generate in the first place. if you want to think about inequality, i want to keep -- mention a couple of things you want to keep in mind. nobody in the world today is poorer than they would have been before the industrial revolution. i know that because if you were poorer than he would have been before the industrial revolution, you would have starved to death by now.

another thing to keep in mind is that economic growth is new. it is only a couple hundred years old. this process is just getting started. it started some places later than others and in some places, it has had fits and starts. but we have not begun to see the power of what economic growth can do on the world wide basis. and we should remember that in the long run, a rising tide lifts all boats. here is what economic growth has done for the poorest americans. but look at household below the poverty level. 98% have refrigerators. 67% have washers and dryers. 96% have color tvs. 75% of those have over 300 channels. i grew up with three black and

white channels. 68% have air conditioning. many live in clients where air- conditioning is superfluous. 63% have internet access at home. these are households below the poverty level when you serve a people at that level and you ask them to you have enough food, 93% answer yes. do you have any smoke or boulders that bother you? 93% say no. medical needs? 86% say no. it is more difficult to lead the life of it for american then of most people in this room but it is the difference between that life and the like that everybody took for granted 200 years ago. beyond that, you remember those

letter games i mentioned a little earlier. i said the average american has gained the equivalent of seven vacation weeks per year in the last 40 years. that has been distributed very unequally. the poorest americans have gained twice as much, the equivalent of 14 weeks of ledger. nobody would want to claim that these great increases in ledger fully compensate for the differences in income but it is also true that big increases in leisure are not nothing. we do not lose -- live by bread alone. our happiness comes not just from our income but are free time and the time we have to spend with our friends and our favorite tv shows. it is worth keeping in mind that over the last 40 years, if you're worried about

inequality, you might keep in mind that the big relative wearers -- winners in the incomy derby had been in the leisure derby and vice versa. one might also point out that the quality of the leisure is -- has been improving. 50 years ago, the rich man and the poor man spent their leisure time in different ways. now, the rich man and four men are surfing the same internet and watching the same 500 cable channels. so there has been a great equalization there. when we turn to asia and africa, they are the we did the poor there are considerably worse off than the united states but we are seeing in many places the same pattern as we saw in the west said back by 150 years or

so. take a child labor, for example. in asia and many parts of africa, incomes are about the same as they were in the united states in the year 1840. and people send their kids to school -- to work at just about the same rates that americans did in the year 1840. moreover, we know historically that patterns in the west of how people pulled their kids out of the work force as their incomes rose above certain threshold levels. we a seeing the same patterns in africa and asia. you might have heard that child labor in the third world is caused by big multinational corporations doing their influence around and convincing people to send their kids to work against their own interests. if that is your theory, then you

have to explain why americans and englishmen were sending their kids to work in 1840 at pretty much exactly the same rate at a time when there were no multinational corporations around. poverty is a terrible thing it means facing terrible choices, like should i send my kid to work or to bed hungry? poor people in various cultures at various times have faced those questions and have all settle them in the same ways. at certain levels of income, you send them to work, at higher levels, you take them out. it is the height of arrogance for those of gotten past that stage to look at other people who are now facing that and saying you ought to do it very different -- differently than we did. but a lot of americans take that that view.

this is a 10-year old girl from bangladesh. it was taken in 1992. she lost her job as a result of legislation sponsored by senator tom harkin's that closed down factories in bangladesh that were not up to the standards that american lawmakers thought day off -- ought to be up to. about 50,000 children lost their jobs as a result. she was interviewed by an anti- poverty activist in bangladesh at that time. this was her take on this situation. we are poor and not well educated so they despise us. that is what they shut the factories down. there is one difference, though, between us and 1840 and the third world today. the differences that we were poor, there was nobody was which.

there was nobody we could turn to for help. the poorest people today are turning to the relatively rich and asking for help. that raises the question of what ought we do about that? a hard question with a lot of aspects. i will not settle it for you today. i do want to say a few things you might want to keep in mind when you think about that kind of question. it is remarkable to me the extent to which arguments for income redistribution, either across the world or with in a country, are literary arguments. that is not a criticism. but they tend to be arguments based on literary anthologies, metaphors. i like arguments for metaphor. the arguments for redistributing income are very heavily metaphor laden. they say things like we ought to redistribute income because society is like a family or because society is like an

insurance. i like metaphors. i also like taking seriously. let's look at those metaphors and see where they lead us. let's start with the family metaphor. here is how this metaphor goes -- society is like a family and we should redistribute income within that family because families do not allow one member to struggle while another prospers. that is almost a direct quote from the governor in new york. families cannot allow one member to struggle while another prospers. the problem with that metaphor is that families do allow one member to struggle while and other prosperous. they do it all the time. we know that from the data. in families where -- with our

great income disparities, more often than not, parents divide equally. it is the final opportunity to redistribute income among the people you love the best. most people look at that opportunity and say i do not want to do that. i do not want to redistribute among those people. so if your goal is to make society more like a family to reflect the values that we observe, then your metaphor tells you that we should have less income redistribution, not more. a better metaphor in my opinion is the insurance metaphor. society is like a big insurance contract. and the story that people want to tell here is that before we were born, any one of us could the been born into any circumstances at all. we could of been born smart,

stupid, ambitious or lazy, with great opportunities or with no opportunity to read if we had had the opportunity prior to being born, we would have entered into an insurance contract that said those of us who get lucky will take care of those who do not get lucky. the argument is made that we did not actually enter into that insurance contact because before your board, even the insurance salesman cannot figure out how to reach you. -- before you are born, even the insurance salesman cannot figure out how to reach you. that is my reading of the argument that is often made. we all know we would have signed the contract if we could have and therefore we are morally bound by it. that kind of argument was the basis for the monumental book on the theory of justice. john rawles was an influential

philosopher at harvard. i do not understand large parts of it. on those occasions when in the past whenever i quoted it, i would always get a hand written note from him reminding me that i did not understand it. [laughter] about that.rt but this insurance metaphor, and i think most people reading of it is that it is a big part of what underlies the full story. he was a philosopher. i am an economist. since i am an economist, i would like to think about this matter for a little more deeply. i would like to take that

metaphor seriously and see where it leads us. the problem with an insurance contract within -- with enforcing one that nobody ever signed is that you have to figure out what the terms of the contract was. how much insurance would we have bought before we were born? we cannot look at documents to find the answer to that. but we can make estimates which is the kind of thing he and his followers seem never to do. you ask how much risk will we be facing back there? you can estimate the rest by looking at the range of ability that living people have. we know how smart the smartest people are we know how many opportunities the lucky attach. we know how many opportunities the least fortunate have.

we know the variants of outcomes and that is a measure of how much risk people were facing before they were born. want to have measures that, you can ask when people face commensurate levels of risk in other areas, when looking at the possibility of a fire or a burglary, when they face risk in similar levels of variants, how much to the actually buy? you can back out how much people would have paid to avoid that risk. so you can do a quick back of the envelope calculation of all that and ask yourself what would the terms of that insurance contract have been? how many people would be have agreed, -- agreed to support?

what fraction would be say you are not earning much anyway, you might as well stay home and we will take care of you? do that on the back of the envelope. my former colleague did that and i did it and we got the same answer. so i have a little faith in it. the percentage of the population that should be permanently unemployed and on welfare if we buy the insurance metaphor -- 23%. bigger than any social insurance program that anybody has ever remotely contemplated in this country. 22% of the population should be on welfare permanently and never asked to work. that is pretty amazing. on the other hand, i said this was a quick back of the envelope calculation. one thing left out was the fact that in a world like that, there would be tremendous disincentive

of fact. the will in this world would be if you are among the 23%, you do not have to work. the effect of that which our calculations did not affect for is that everybody is going to play dumb. [laughter] if you re-do that calculation, making the sort of worst case possible assumptions about how those effects will play out, you get a different answer -- .3% of the population should be unemployed and on welfare. a much smaller program that anybody has ever contemplated. so if you ignore the disincentive affects completely, 23%. if you assume they are as bad as they can possibly be, .3%. we're in there like the truth, i do not know the answer to that?

-- wherein that lies the truth, i do not know the answer to that. if anybody is arguing for redistribution based on an insurance metaphor, they better be doing the kind of calculation and be able to show you their numbers and how they got their numbers. and what assumptions they made. this is the kind of thing that goes into translating a metaphor like that into an actual policy proposals. the way you would want to go if you took the insurance metaphor seriously in the first place but there are problems with that. one of the big problems with the insurance metaphor as it is used is that the social insurance program that we have in this program -- in this country does

not actually ensure you against any of the really bad things that could happen to you. things like being born a in cuba or albania or mali as opposed to canada, luxembourg, or the united arab emirates. remember, this is an old slide -- this is what we learned about what poverty is like in america today. our insurance metaphor tells us that we are supposed to be insuring people against the really bad things that can happen to you when you are born. being born into that, that is not so bad by world standards. so if you took the insurance metaphor seriously and i think it is not entirely unreasonable to do that, your conclusion would have to be that every single penny we make in welfare

payments should be going not to east los angeles but to ease the more -- east timor. another disconcerting thing about this insurance metaphor -- by conservative extrapolation, our ancestors was making $1 million per day. -- will be making $1 million per day. it is striking that we have these conservationists arguing that people like what you and i living the lives we lead off to be scaling back our lifestyles, living more conservatively in order to improve the quality of life for these future gazillionaires. that is a sentiment -- the sentiment of these people is that there should be a tremendous amount of redistribution from the ballot to the poor, namely us, -- from

the namely poor to the newly rich. often these are the same people who are always arguing that we need to redistribute more from the rich to the poor. i have not pointed to a flaw in either arguments separately but it seems to me these arguments are so much in conflict that when you hit the same person making both of them, you have to wonder whether they have really thought things through. those are all philosophical observations about the issue of income redistribution. i want to put the philosophy aside and talk about the main practical issue within income redistribution. here is the issue -- that it never works. it never works. nowhere in history, no where in

the world at no time in history has any program of income redistribution as far as i am aware, lifted substantial numbers of people out of poverty. occasionally you can somewhat alleviate the ravages of poverty for small numbers of people for short amounts of time. but i am not aware of any case where substantial numbers of people have been lifted out of poverty through income redistribution. the only force we know of that has done that is economic growth. so if you want to solve the problem of poverty, what you have to do is ask yourself where the growth is coming from and what do we do to nourish it? these numberst -- are at least 10 years old. if i craft them today, the overall picture will look the same. this is income per worker. that is capital parker, the

value of the machinery -- that is capital per worker, the value of the machinery workers are working on. the physical plant that the workers have to work with. what you see there is a very clear picture. the numbers confirm it. the more capital workers have to work with, the more they earn. you look at that and you say that solves the problem. all we need is for capital. it is a little trickier than it sounds. where does capital come from? in order to produce capital, we have to be not producing some consumer goods. the guy who was building the assembly plant is not simultaneously building and ipod for you. the people who are constructing the capital and the resources

that go into that have to be diverted from consumption. so we only get this stuff that people consume less, say people are consuming less is saying they are saving more. to get more capital, you have to get people to save more. unfortunately, just sitting more is not enough. here is why -- the more we save, the more capital we bills. the more capital the have, the more resources we have to put into maintaining it. capital needs maintenance. the more capital we built, the more we put into maintaining it and the society that relies on saving investments for its growth is going to find -- the move of this letter a little bit but then you are putting so much effort into maintaining that extra capital that it is hard to move up any further.

you need something else to push you up that ladder. it is crystal clear what that one something else is -- the engine of growth is innovation. i recently had a historian tell me the reason the industrial revolution happened when it did can be traced back to a single cultural phenomenon that the idea spread that no matter what you were doing all week, it was always worth taking a couple hours every now and then to ask yourself how to do it better. the idea they should put a little effort into figuring out how to improve the way you did things was the least according to this historian, the key driving fact of the industrial revolution. innovation is the only thing we know that can drive growth. yes, you need savings but saving alone, theory and evidence tells you, cannot do the trick.

what this innovation mean? people always think of these wonderful electronic devices. they look at the iphone they are carrying. there is an addition for you but it means more than that. it also means the farmer who invents a new method of crop rotation or the business person who invests a system like inventory management. an idea that has done more to alleviate the difficulties of poverty in this country than any idea i know of that has ever come from the united states congressman. you can fly to tokyo partly because somebody figured out how to build an airplane but also partly because somebody else figured out how to ensure it. you need both kind of innovation. you have a computer on your desk or the because somebody said hey, i wonder if we can make computers -- computer chips

out of silicon but also partly because somebody else said i wonder if we can fund start up companies with junk fund. take away either of those in the computer revolution goes away. if you want to know which is more important, follow where the money went. go back to the early days of the computer revolution. in the early 1980's, microsoft's annual profits were about $600 million a year the was also the annual profit of michael milken. they were about equally important. innovation drives growth. that raises the current -- question of what drives innovation. one is education. the other is economic freedom. let me tell you a couple of

words about education. the great experts i always go to for information on this is at stanford. he has done all the research on the relationship between education and economic growth. he estimates if you could improve mexican schools to u.s. quality, you would add to% a year to their growth rate. that is phenomenal. think about what to pointed% has done for the united states. 2.3% hask about what done for the united states. i want to take a minute to say something about how we figured that out. you can look at different countries and notice the ones with good education have higher growth rates. that does not prove anything. because we all know that correlation does not prove causation. you have to do something

trickier. i am pulling up numbers that are for illustration only. these numbers are 20 years old and would have changed by now. but here is what these numbers mean -- a haitian -- i will say it wrong then i will say it right. for a haitian, an extra year of education as 2% to wages. for a mexican, an extra year of education at 2.03%. that is a measure of the quality of education in those areas. how much it adds to your wages, how much it is giving you in terms of practical skills. that is still the wrong way to do it because the haitian working -- is working in haiti. the japanese is working in japan. some differences in those labor market. the right way to do this and what these numbers really mean,

these are boom -- measures of people who have immigrated to the united states and work in the labor market. a jamaican working in the u.s. labor market with an extra year of jamaican education earns an extra 3.5% in wages. if you are working in the u.s. labor market and a dicks -- an extra year of japanese education, you have an extra 8.2% in wages. measuring the quality of education in that way in the correlating it with economic growth is how he gets a lot of these numbers. how do we do better? how do we improve our education? to me the obvious first answer is that the government out of it. short of being able to do that, if you look at evidence on what has actually worked in various experiments and school districts around the country, something

like reducing class size is remarkably ineffective. linking teacher pay to test scores is remarkably effective. the really big one is firing bad teachers. if we got rid of the bottom 10% of teachers -- that does not mean every year you do 10%. once only, you take out the bottom 10%, replace them with average teacher's. then within 10 years, you will have added three-quarters of a percent to the united states growth rate. that is gigantic. coming back to my earlier slide on what drives innovation, isaac education and economic freedom. we talk a little about education. let's talk about economic freedom. what does that mean? it means small government, party rights, sound money, -- propert y right, sound money, freedom

to fail. freedom to fail means being able to start a business that other people think are crazy and knowing that you are not going to be bailed out at the end if it does fail. if people are offered to billion out, they will tell you how to run your business. -- if people offer to bail you out, they will tell you how to run your business. if you do not have the freedom to fail, you do not have the freedom to succeed. it everybody fails gets paid out -- gets bailed out, the people who succeed pay you out. you need the freedom to do something other people think is crazy and to fail if necessary. let me say a few words about that.

all -- we all understand that some taxes are necessary to run a policy. we also all understand that all taxes have disincentive effects and that is bad. we also understand that some taxes have worst affected than others. a tax on wages discourages work. that is bad. a tax on capital income also discourages work. because part of the reason people work is to accumulate savings so they can invest. but that tax on capital income in addition to discouraging work also discourages savings. that is a double with me. -- dpuble whammy. -- double whammy.

to some extent capital gains, state taxes, this discourages both work and savings which is doubly bad. that insight pervades the public finance literature of the last 25 years. one thing not by the general public is remarkably unaware of these days -- one thing i find the general public is remarkably unaware of these days is that capital tax rates in the long run ought to be zero. capital taxes do so much more harm than wage taxes that you always improve the world even for the poorest will need to replace the capital tax or wage tax. if you have a choice between evils, the capital taxes are

almost always the worst. there is a great deal of disagreement among economists about what the transition to a book like. how quickly should be go to that 0% capital tax rate. there is another big issue -- the reason you want to set the capital tax rate to zero is that people will invest more. they will not invest more unless they believe he will keep it at 0. there are a substantial number of economists who say you will never get people to believe that he will keep it at zero city might as well not try. there are a substantial number who say no matter what you commit yourself to, people will know that 10 years down the line, you might change your mind and because of that, it will have that disincentive affect any way. those people have an argument.

other economists are not commenced by that argument and say that we would get very far -- are not convinced by that argument and say that we would get very far. but where the consensus lies is that if we could get to that 0% rate and commit ourselves to it, that would be a good thing. the world would be better. the rich will be richer and the poor would be richer. in another -- not just the long term but the median term. those are the aspects of economic freedom that i claimed drive innovation and growth. how do i know that? for starters, here is a graph of economic freedom. the fraser institute in canada rates countries on economic freedom. what do they mean by economic freedom?

this was not a random list. this was a list of criteria the institute uses. this is the measure of economic freedom. this is per-capita income in various countries. there is a general upward trend. as economic -- economic freedom goes up, so does per-capita income. that chart proves causation and correlation are two different things. that is still only the beginning of an end -- of an investigation. you have to look at the data more carefully, controlling for variables to review and discovering economic freedom is really important. the ideal way to determine something like that is with a controlled experiment. that is always the gold standard in science. we have exactly to controlled experiments on this. one is called korea, what is called germany. split the company -- split of

the country in half, one goes one way, the other goes the other way. in both cases, the results were definitive. the problem is that n =2. an experiment with two observations is never as convincing as one with more. an economist at mit and harvard had a very clever idea for how to find other controlled experiments. he said let's look at the countries that were colonies of england. the english set up a very different political and economic regimes in different countries. let's see whether the ones that have more economic freedom prospered more. that is not really a controlled experiment because somebody

could always argue maybe the british chose the prosperous places to give the freedom to. but his idea was that is not actually what happened. if you look historically, what they did was they looked around at where are the places that have a lot of bad diseases? like malaria and yellow fever. these diseases did not affect the natives because they were immune the but the affected the colonists. the british said, the places that have malaria and yellow fever, we will not settle there. so we do not care how bad things are there. let's give them a tyrannical regime and the non-free regime. the places that are free of malaria and yellow fever, those are places we might want to settle some day. so let's make things there as free and democratic as the

place where we might want to live. that kind -- that is kind of a controlled experiment. it is kind of random which places are subject to malaria and which are subject to yellow fever. that is not the british going in and saying who is prosperous and who is not. if you look at that and ask about specific countries, i do not have country by country data at hand. i should have put it up here but if you look overall, you find considerable evidence that freedom actually causes prosperity. freedom causes prosperity, economic freedom cause prosperity. what about other kinds of freedom? other kinds of freedom did not seem to matter very much. if you look at political freedom, these are all things i think most of us would agree are good, free and fair elections, the right to organize, no

dominant military or religion, open transparent government, rights to minorities -- none of that correlates with prosperity. civil liberties, freedom of expression, religion, absence of terror, gender equality. none of that plot -- correlates with prosperity. freedom house makes -- is an organization. in this case, it is not like the other craft. 1 is the freest -- the freest countries. it does not continue as the go down. if you look deeper into that data, there is no serious correlation there. what matters for prosperity is

economic freedom, not the religious freedom, not the political freedom, not the civil liberties. so i will summarize again. i will point out of his intellect. education -- people who are educated save more, and a bit more. the data shows that if you improve education at the higher levels, you get more innovation. if you improve education at the lower levels, innovations tend to get adopted more quickly. education at the higher and level -- higher and lower levels both improve innovation. freedom leads to more innovation. people have the rights to their discoveries. it leads to more savings because people will say more when they believe their savings will not be conference -- confiscated.

i will stop there. i went along burden of planned to to read and i will take questions. went longer than i planned to. and i will take questions. [applause] can you take and the european debt crisis situation and put that into perspective and say are you still optimistic about europe or japan? you seem to have intractable economic problems. >> on the other hand, just about all of them still have positive growth.

to look at the balance sheet of the government and draw a conclusion about the economic health of the country, the government's balance sheets affects all of us, each won a bus on average goes something like we do each one of us on average owes something like $50,000. in the long run, that is certainly affecting our individual well-being. it is also true that we are all richer than we were 15 years ago and that we are still getting richer. good things take much worse turn? capable of completely screwed things up? absolutely. we've seen that in africa and

then you have seen incredibly corrupted government turning into negative growth with retrogression. there is also fortunately no limit to the amount of good that three people can do. people talk about --, said last night that we are broke. we are not broke. if we were broke, you cannot afford to be here in this room. the government has been a lot of money, much of which i think they should not have spent. we are poorer for that. we are about as much poorer for that now as we would have been if they paid for it as they went along. they are promising to take it from us in the future.

they could have taken it from us in the past. it costs us about the same either way. they can do a lot of damage but there is a lot of wealth there for them to play with. i wish they would do less damage, but i do not see in the west government actually bringing this whole thing crashing down. >> about the claim of education causing growth or maybe it the other way around. if you look at curbs for howard gdp rose and how college education rose, bolstered those exponential curbs but it seems like gdp rose -- both of those .re exponential curve is gdp growth to a golf in the late 1800 -- took off in the late 1800's.

>> these things interacted it all sorts of ways over the years. 200 years ago, you saw increases in the amount of education people were getting just as a response to the fact that technology was growing and to use it, you need some education. individual choice is to become educated deaf police started as much as 200 years ago. more recently, much of the evidence on education and growth is international evidence. the u.s. numbers you are quoting, i do not have in front of me. i wish i did. but there is a lot of international evidence that education precedes growth. i wish a had a slide to put up but the cycle is planning to come next time you are in front of a computer with the google screen, all the careful

statistical work has been done on this. >> i agree with your conclusion that economic freedom is conducive to growth, " question whether some of the -- we pointed out what the various english colonies, it was really random. if a country with more susceptible to malaria or yellow fever or what not, that might be indicative of other problems that would also hamper growth. >> the reason they want to rule that out as that reject the malaria and yellow fever were not actually a problem for the people who were working there. the fact that have not bothered to eradicate those things is probably not indicative of anything other than the fact that they were not a problem.

>> given that congress takes no action, the increase in the tax on capital gains is going to be 66% on january 1, 2013. the increase and the tax on dividends is going to triple to 45%. the you have any forecast for us about what you think the impact will be on america if there are no changes by congress? >> these things are disasters. if you want me to make precise numerical predictions, i am absolutely not going to do that, but these will be disastrous things. as i said, there is something like a consensus among economists that all capital income should be taxed at a rate of zero. , thenally, in the 1980's

research we had then showed only that it would improve prosperity for the average american. more recent research has shown that that prosperity barry robustly, that it would pervade every income class. again, it doesn't work a people do not believe you will keep the rates low. this kind of thing is why people do not believe you will keep rates low. whatever they are now, people are not responding to the current rates, they are responding to what they think the rates will be next year. if you polled economists, this is one of the things -- there is stuff we all agree that there is too much occupational licensure. we all agree that free trade is

almost always a good thing. we all agree that if you can commit yourself to look at rates, you ought to do that. it is a very big deal if you don't. >> the 2.3% growth we have had since 1960, do you predict we will have growth in 2013? >> the answer depends so much not on what the tax rates are in 2013 but on what people expect them to see in 2014-2016. i have no idea how those expectations are going to evolve. >> you imply the answer to this but i would like to see if you have anything more to add. anytime you have read distribution, say from americans

to americans, the effect of killing the goose that lays the golden eggs for both growth in america and any capital that might have been exported to other countries. even if welfare were to help the poor, how much less would help them if you just let people keep their money and invested? >> that is what i tried to address with the numbers i put up there. if you make your worst possible case scenario assumptions about that, you would still in up discovering, if you take the interest seriously and take your issue seriously and make the absolute worst case scenario with the bill is killing you are going to do, you should still have a small social welfare net, smaller than the one we now have. if you make more realistic assumptions about the effect of

these disincentives, you would probably end up arguing for a bigger social safety net. again, what i want to do is not make the case for any particular number, but to make the case that anybody who is arguing on those grounds for social safety net has got the obligation to tell you exactly what assumptions they made, what their calculations were and how they defend that number. >> i am serving in the swedish parliament. i have one question or clarification. he said there is no significant correlation between the one hand, civil liberties and the other hand, economic growth. are you therefore saying there's no correlation between civil liberties and fiscal freedom on the one hand, and on the other hand, economic freedom in the sense that one will promote the

other? >> the question. -- good question. let me try and remember. i think what you will find is that if you do not control for economic freedom, then very high-level political freedom and civil liberties or correlated with prosperity, but if you get away from the high levels, the difference between a moderately free and the not free all, you do not see any correlation at all. the interaction between the political terms and the economic terms is exactly the right question to be asking. i wish i could remember the answer for sure. i think i do, but i don't want to say anything i am not sure. i will look it up and i will tell you tomorrow.

great question. >> ana diaz due to clarify your meaning that freedom causes prosperity. does it also reduce poverty? are they saying the same things? if the top 10% have prosperity increased and the bottom 90% have their poverty increased, -- let me just say it this way, can i tell 9% of my friends at their property is being decrease by freedom? >> empirically, those things go hand in hand. if you look in the united states, i showed you what party looks like in the united states today. that improvement in the quality

of life for the poor has move right along with overall growth in the united states. if anything, and has moved faster. a billion people in china have been lifted out of poverty through the power of growth. of any know offhand example, ongoing example where society has had the same growth and it has not brought the lower end up along with it. certainly the big example in the west and asia, you see those things going hand in hand. >> i wonder if you have any comments about tyler:'s low hanging fruit metaphor is on growth and the possibility for growth in the future. >> yes, i have a comment on that.

hang on, if i can figure out how to use this. >> there is my comment. [laughter] you had some very positive statistics for the u.s. for, but one could possibly argue that is not just the affected could also a testament to the success of the redistribution of a welfare state. is there a way can filter out so it is a much more striking example of the correlation? >> the best way i can think of

to address that offhand is a very powerful correlation that we see always and everywhere between worker on one hand and encumber worker on the other hand. in industrial activity, approximately two-thirds of revenue get paid out to workers. that is a good, and your larue from -- rule of thumb that will carry you through centuries and -- that is a good rule of thumb. the war output areas, the more workers are going to get. you can do some redistribution around the edges but were really affects the quality of life for the poor is their wages. wages are tied to the mound of capital they have to work with.

again, you see that not just over time but across countries. >> the only comment i heard about population was seen in the grass because they were done on a per-capita basis. i am wondering if there are any comments you could make on population in regard to growth and perhaps longitudinal studies. >> i will spend half of wednesday talking about population. i don't want to give away my key points. >> i want to ask if you thought micro lending to entrepreneurs around the world increases their economic freedom. >> this micro lending stuff warms my heart. i love the idea of it. it makes me feel good. whether it actually works, i have no idea. i don't have a clue. i hope it does because i think it is really cool.

>> i wanted to ask about two things that seem to have a great effect. that is the impact of corruption and property rights, but with rule of law. >> the effect of corruption is the most free ddc most dramatically in africa. countries have gotten started on a growth path to different parts of the world started at different times and they have all moved up the growth path. especially in africa, where they are able to put the brakes on a completely in turnaround. corruption is a huge break in economic growth. there are all kinds of arguments about why the industrial revolution came when it did. there is a good case to be made that the advent of william the

fourth and a greater respect for property rights and economic freedom attainment that was a necessary prerequisite for the industrial revolution. i am not enough of a historian to really defend that. but it sounds right to me. >> co was wondering whether you have given some thought why the industrial revolution happen when it did happen and why only in the west. >> everybody that things about this stuff has asked why the industrial revolution happened when it did, and nobody has an answer to that. my friends tell me it was the spread above by role idea that it is a good idea to think about how to do things better. you could argue that sometimes these things happen randomly.

maybe that is the right theory. the survey were political changes in england and the changes did create a much safer climate for investment. i suspect -- that is telling you that we should care about our politics and our institutions and we should be concerned to preserve those sorts of freedoms. >> tuesday, the senate energy and natural resources committee holds a hearing on the backlog of construction on water projects in the west. see it live starting at 10:00 a.m. eastern. then at 2:15 p.m. eastern, the senate foreign relations committee examines business

opportunities for american companies in latin america and dealing with increased competition from china. that is live, also i -- on our companion network, c-span3. >> we did not begin as a city in kentucky. there was only a vague and native american region and later a county in another state called kentucky. we began in 1778 as louisville, virginia. >> this weekend, join us from louisville, kentucky, saturday noon eastern. literary live on c-span2. kentucky's senior center mitch mcconnell and, rebidding american politics, the internet revolution. sunday at 5:00 p.m. eastern, three weeks at farmington plantation in 1841 would be a

key in shaping abraham lincoln's few months later. toward that plantation today. also, the heyday of the steamboat on the ohio river. look back on the belle of louisville. once a month, c-span is local content vehicles explore the history literary life of cities across america. this weekend, from louisville, on c-span2 and 3. >> tom of talks about the origins of the state at the cato institute annual conference of liberty. he outlined the history of the government beginning with the predatory state, to our current system. this is part of forum focusing on economic growth and the foundations of liberty. this is 90 minutes. >> good morning. we are starting with another presentation to before get started, i want to make a couple of quick announcements. he noticed their books for sale

outside, also studies and your happy to take them, read them, enjoy them, share them with your friends. everything is also available online. there's a huge amount of research materials you can put to good use. i would like to mention when we go to discussion, please make sure you are close to the mike because it is are to hear if you are holding it just a little bit away from yourself. they are very sensitive to the range. the presentation i am going to make is a bit different from steep. it is -- different from steve. this is primarily sociology. before that, i want to make a little advertisement because i was very happy this morning. i got an e-mail from one of our libertarian colleagues in iran.

that is the book ago the morality of capitalism" and an iranian bookshop in pteron t -- ehran. i was pretty happy about that [applause] that is a project that one of our colleagues raised. he was very active in promoting libertarianism in the person speaking world. that is just a quick advertise that. now, back to our future presentation for the day. to look at the origins of the state and the government. let's start out with something that is really a remarkable feature of contemporary discourse. a lot of people believe the state is responsible for everything.

that t.v. and example. a professor is not only professor of law at university of chicago but director of the white house office of information regulatory affairs, government is implicated in everything people own. if rich people have a great deal of money, it is because the government versus the system in which they are entitled to have and keep that money. that is the academic formulation. we had a more popular one recently. >> if you have been successful, you did not get there on your own. you did not get there on your own. i am struck by people who think it must be because i was just so smart. there are a lot of smart people out there. it must be because i worked harder than everybody else. then we tell you something, there are a whole bunch of our working people out there. [applause]

if you were successful, somebody long maligned gave you some help. there was a great teacher somewhere in your life. somebody helped to create this unbelievable american system that we have that allows you to thrive. if you have a business, you did not build that. somebody else make that happen. the internet did not get invented on its own. >> that was al gore, as we know. [laughter] if you have got a business, you did not build that, somebody else made that happen. i would like to introduce him at some point to my nephew and my niece in law who have been working 65 and 70 hour weeks letting someone else build their business in colorado and put in an enormous amount of their own

sweat equity into the business that obama is building. but to be fair, looking at it in context, that statement was preceded by somebody invested in roads and bridges. so let's be fair, the point is you did not build those roads and bridges, you did pay the taxes with which they were billed, because of the businesses and the work and the enterprise and the labor in your life. the best interpretation of what the president offered us is that he does not understand the first thing about marginal contributions to output. namely the question is what additional hour of labor, one additional dollar, what additional acre of land. he does not understand how the world works, but that is actually the margin that we should be focused on.

that is just a little bit of contemporary discourse. look at this presumption that all the surplus is attributable to this day, and an assumption that therefore, the state is entitled to it. after all, it could cover responsible for. the consequence is, they are entitled to it. you have no plan whatsoever on anything that you have produced because you did not do it. kaydin been born and very poor country, you probably would be poor. i think steve made that point very well. if it the bus had been born and a desperately impoverished country not had education, health care, living under some kind of tyrannical dictatorship, we would not be as prosperous as we are create that is certainly true, but it does not follow that the additional

efforts to make within the context of a freer society somehow do not matter, that they do not count. there is another become a philosophical problem here in that is the argument that all the surplus is a trivial -- a trivial to the state cannot be right. with our surplus, you could not have had a stake in the first place. it requires a surplus to be able to say that. people systematically argue all surplus is attributable to the state to that cannot be true. there had to be a surplus before the could have been a state.

without a guard dog, someone could have stolen your house and consequently, your dog is the legitimate owner of your house because it contributes protective services ticket. question, whathe is a state? here is the definition offered by max favre, one of the greatest sociologists in the last 200 years -- by max faber. we can point out that there are groups that made -- lay claim to a monopoly of violence, but unsuccessfully. mafia groups, neighbors, -- gangsters, neighbors of a gang and so on. also, they laid claim to it in terms of legitimate exercise of

power. there is some reason they should have that authority and other should not. pilot, this story being another of the defining characteristics of the state. political formations are territorially bounded. this was not true vote variety of political organizations and the class. a state in which the territory will be the natural, and of a nation. this is a modern form of the state that was not founded previous day formations. let's go back to the question of surplus. why do people have 12? early libertarian sociologists address this question in a

famous magazine that was published in france in the early years of the 19th century. there exists of the world only to great parties, those who prefer to live from the produce of their labor or their property, and those who prefer to live on the labor or property of others. we could say makers and takers, people who believe in producing wealth and those people who believed in appropriating the wealth of others, or acting so as to do so. another great sociologists figured in a wonderful, short book, the economic means and the political means. they are to fundamentally opposed means whereby man of our assessment is in pale to obtain the necessary means of satisfying his desires.

they are work and robbery. he considered the state to be the organization of the political means to the attainment of wealth. there were others who also look to this question historically. there was a french historian from the early 19th century to look at the formation of european states. he wrote a most interesting book tracing the british state as he knew it to an original act of conquest. as the foundation of the state system of britain. it pioneered something i will talk about in the next lecture, the formation of parallel activity in the formation of the

so-called communes of europe, the city's, the merchant guilds and self-governing municipalities of europe. he considered that to be the foundation of civil society, of civilization, if you will, and of modern freedom. one of the things he did was to go out and collect all the charters he could gather from the east european cities. they were social contracts, if you will. no one had paid any attention to them in many hundreds of years. he went and gathered the than published volumes of of the real foundation of the origins of civil society. let's look at what the economic means have to precede review before you canevelop a state. you do not find states among hunter-gatherer's. they do not generate enough of a

surplus to be able to confiscate. we do not get much of a state formation. you need settled, an agricultural production among persons who can generate sufficient wealth. they typically are conquered by nomads, people who heard animals. --who herb animals. -- herd animals. people with horses who were able to conquer others. these were nomads who herded cattle or goats are other creatures and then re able to concord sedentary agriculturalists. this is very deep foundation of the political system that we experience today. indeed, there is a memory of this old conflict preserved in

genesis 4 about how abel was a keeper of sheep, but cain was a tiller of the ground. this is an echo of this ancient conflict between people who are tillers of the ground and produce these surpluses and and nomadic people, the keeper of sheikh cockrum them and are able to then to exploit them or extract surpluses from them. this experience of the development of empires of nomads over cultivators we see in the middle east, and mesopotamia. here is a depiction of a site of federal agricultural list, for harvesting grain. in the earliest forms of conquest by people with horses is the use of the word jerry it.

-- of the word chariot. it is essentially a peasant card that has been hitched to the back of of course. then developed in such a way that it can maneuver and from that platform you can throw a javelin or shoot an arrow and then get away. it gives them a tremendous advantage over people who did not have access to horses and therefore are not able to fire and flee rapidly. the development of the mounted soldier or knight, in which the star plays a role, allow them to fight directly from horseback bge in which the -- in which the stirrup plays a role. , print those who had been there previously who were conquerors

from a previous wave of appropriators. so the middle east had a tremendously enormous role in the development " political institutions. many things come from the middle east. among them are all domesticated house cat, descendants of middle eastern cats. kopp this was recently documented. these are my two cats who are descendants of those middle eastern cats. it seems to be that cast successfully domesticated humans first in the middle east , and what happened was, when you had grain production, you have large amounts of grain. would you get with large amounts of grain is mice.

what are very attractive to cats? mice. those cats adventuress enough to come and less of among the ugly, harris a bus that had all the grain, which is to say, all the mice, were able to successfully domesticate human beings and invested their will. -- and then the ubend us to the. it is an important phase in the development of human political associations. if the leader of a roving gang finds only slim pickings is strong enough to take hold of a given territory and keep other branded out, he can monopolize crime in that area and become a

stationary bandit. that sounds really terrible, but in some ways it is an advance even for those who are now being plundered and robbed. if you have roving bandits to come through and plunder, fight, bern what they cannot take, and then leave, and then come back next year, this is terrible. in some sense, it is advance from the perspective of the plundered when they say we are going to settle down here and plunder a little bit all year long. but the consequences, they don't destroy everything. paradoxically, this is in some ways an advance from the perspective of the plunder. we should not forget fundamentally what is going on in the extraction of surpluses from people who produce it. there is an interesting book

that came out recently by an anthropologist, james got from yale university. i learned so much from this book. it is called the art of not being governed. it is about regions of the world that have not been successfully conquered. it talks about the incentive of the state and of its rulers. it sounds very simplistic. economic models have argued that they want to maximize gross domestic product. if there is a competition among states, those who can maximize gross domestic product somehow or rewarded. scott says that is not the right way to think about it. it is the product that is accessible to the state with the incentive that the ruler and maximize.

the state accessible product has to be easy to identify, monitor, and enumerate as well as being close enough geographically. one thing that's got points out is the way in which power flows across the geography. the says there is a fraction of power. does not go uphill very well. they tend to call for all of the bear valley the lower areas and those who escaped move up into the less desirable highlife. you can have the history of these conquests by looking at the sedimentation of ethnicity, for example. go to the mountainous places of the world. a small country like georgia, 13

languages are spoken there on a daily basis. each one having been pushed into its only a region in the mountains, so they were able to be saved from the conquerors who came in one way after another. he points out that people in that situation turn out to be very hard to cocker because they are the survivors and have developed religious and social institutions, legal institutions, forms of agriculture that are very hard to take over. i have pointed out to people that they should have read this book before the occupied afghanistan. those people have never been subject to subjugation by foreign powers.

now the person i am not alexander the great, not the mogul empire, not the british or russian empire or soviet empire, and probably not nato or the united states either. those people have ways of life that makes them very difficult to control. this seems to be something of political decision makers cannot understand. for example, the sociology of agriculture create state leader systematically suppressed the growth of tuber such as sweet potatoes in favor of rice or grain cultivation. that is a little bit puzzling. why would political leaders care so much about the pressing the growth of sweet potatoes and forcing people into rice cultivation? scott points out that you cannot tax sweet potatoes very

effectively. you harvest it when you want it, otherwise it just sits in the ground, still growing. but rice cultivation has to be harvested at the same time. that means you have to have large concentrations of human beings who are available to be drafted into the army. when you do that, a local ruler is there to get their share. other kinds of agriculture may be very difficult for them to plunder and get their share. so we see systematic influence of the political system on a range of different kinds of human behavior. we have an actual, well- documented case study, the establishment of the northern state in northern france which later leads to the establishment of the state in england and indirectly, even our government is traceable in the lineage to

this. >> an interesting case. viking pirates becomes the duke of normandy. it had been a pirate. he participated in the siege of paris and was good at looting. they bought him off with a lot of gold. when you do that, that they now have a goal, i want more. the deal that was finally offered was, just settle down and eludes us all year round a little bit. you will get more and it will live be as costly to us. that is the establishment of the duchy of normandy.

subsequent to that, in 1066, the normans and norseman conquered england and came over with their knives. william the conqueror is able to defeat the english armies and establish their stake in england. a number of interesting things come from this as well. a predatory state that focuses on extraction of revenue from the population, and also the english language as well. i am told by linguists that english has the largest natural vocabulary a language in the world. in terms of normal, natural vocabulary, english has the largest and a relatively simple grammar. you know how difficult it was to

master english grammar. it was hard. what happens is that which is are merged into one. if you listen carefully to the english language, you can hear the violence at its origin. the normans move again to the big houses. the peasants are still speaking anglo-saxon. think about the english language with regard to food. if it is on your plate, it is french. the elegant, fancy people, the french word. when it is outside in the

barnyard making noises, it is almost always anglo-saxon. let's take a simple example in english. imagine our to invite you to dinner. we will be serving swine. would you like another slice of or perhaps a slice of cow. the thought is kind of repulse a been shocking. ends that come it is pork, which is to say it is french. >> is a cow when it is outside being tended by the cowherds who are speaking anglo-saxon. he could hear the distant echoes of an act of conquest and established the modern english state. let's look at some characteristic features of

modern states that are defined features of state power. the first one is a monopolization of law. that claim to have a monopoly to be the sovereign power to determine what is law. we will talk a little bit about petco because the reality of legal practice, rarely do they succeed in exercise and a monopoly. there's a great deal law all around that is not the product of the state. they insist on replacing customary law would impose law or legislative procedures. that make the claim to sovereignty. is an important term of political plot. also the creation of an underlying nation. and this is somehow the nation builds the state. the reality is systematically, everywhere in the world, the

state bills the nation. it goes the other way. you take the french nation at the time of the french revolution, estimated only about half the population spoke to french language. they spoke a celtic or other germanic languages and so on. it was the french state that creates the french nation. the german state creates the german nation. out of all the multitude of incomprehensible dialect spoken in germany, higher german was established and german state creates a germination. contrary to the typical myth about this. then the imposition of systems of social control. uniform rates and measures, compulsory schooling, passports and so on. these severally permeated our consciousness as modern persons.

i will give you a simple example on the question of passports. it now cannot travel round of world without a document issued by the state. you can no longer travel around the united states without a state issued document. this is a very recent development in the united states of america. but for thousands and thousands of years people went where they wanted without documents issued by the state. how is that possible? i have on my wall an advertisement from a german magazine from the 1920's. as a lovely engraving of a couple in a train compartment. german border official is asking in german, french, english, italian, your passport please. this is how wonderful passports or because they give you the freedom of the world.

of course that is the opposite, that restrict your freedom. you are not allowed to travel without the permission of the state. this mentality people have that the past four give me the freedom to travel, not understanding is the system of passports the restriction of freedom to travel. i gave a lecture years ago to a group of students and after making a presentation unclassical libertarian ideas, one young woman ray the rant and she had that look of a creature -- raised her hand and she had the look of a creature about to pounce. she was ready for me. she asked, do you think the government should issue birth certificates? i have never thought about that, honestly. i said i never thought about

whether it should be a government function. in most places they were issued by church registry and synagogues and mosques and so on. i don't see any reason to, so i say no creeks then she said, how would you know who you are? it was remarkable, she could not conceive of having a personal identity without a government document. somehow, her personal idea was that you could not have an identity did not have ever certificate. i informed her i did not have a birth certificate, and i really don't have any doubts about who i am. but she's so internalized and that mentality she could not imagine it. this does happen to modern consciousness, that we are so saturated with the state is

difficult to imagine life or institutions without it. let's look at the theory of sovereignty that characterizes the modern state. there was a very influential, political theorist and in the late 16th the tree he wrote six books on republic. that focus on the idea of sovereignty. he defined it as the most high, absolute, and perpetual power of the citizens and subject in a commonwealth. o was interesting was, he contrasted that with the fading remnants of another idea of social order, which was customary law, or custom. he dismissed it quite remarkably. he said custom acquires its

fourth little by little and by common consent of all or most over many years. so law appear suddenly, gets its strength from one person who has the power of commanding all. that sounds like an advertisement for custom. he thought of it is why customers should be rejected. law is the imposition in his understanding of authority by force. from above, imposed on society, that was the defining characteristic of law and in his view could only emerge from a sovereign. that is to say the power that is absolute, uncontrollable, and conditioned, or you could say above a lot. customary law moved little by little, acquires its power

through the consent, the convention, the general agreement of parties to agreements. thomas hobbes argue that sovereign power is absolute and indivisible. they would not have liked a federal system like the united states of america. it said this was not a proper state because the sovereignty was divided between the federal government and the state authority, but for hobbes, the state and sovereign power is absolute. no conditions on its authority. another way of formulating that, it interprets its own conditions. there are no extra only impose conditions on the sovereign power. this is the doctrine known as absolutism.

we see this notably by louis the 14th saying i am the state. there is a reason why he was known as the sun king. it is not because of his glorious stand. it was because of the copernican theory of the universe that was emerging at the time. the sun was the center of the universe. everything revolves around the sun. cable order, illumination, more to the world. he was arguing that was the role that he played in human affairs as well. the source of all order. without him, without that sovereign power, there would be nothing. consequently, is a dignified as the source of law and therefore is above the law. that was given voice by another political figure, a team james

the six of scotland, king james the first of england, who inaugurates this to work live in english politics. he wrote a book before becoming king of england in which he argues that the team is above law. a very important principle, the king is above the law. lawyers distinguish between two kinds of sovereignty, a external and internal. those are useful distinctions. external sovereignty may in fact have a positive role in the international state system by diminishing armed conflicts

among states. that is to say the fundamental principle that one state does not exercise the authority or military force, claimed territory of another state. those border lines are significant. these may be happening and average countries like canada, for example, but the u.s. government would not be authorized to use military force in canada because canada is a sovereign state picks that is the kind of limitation on state power. it has an important role of trying to maintain a less warlike, more peaceful international order. on the other hand, internal sovereignty is inherently contrary to the principle of liberty. the classical liberal ideal is that a law governed date, the

law is supreme. not the sovereign, not the ruler or the king or the president or parliament, rather the supremacy of the law. i will talk about that this afternoon in the english context, the idea of the rule of law. the state if the institutional as asian of receiving behavior. to understand that, this is from another great sociologist and economist. it is to understand the importance of concentrated benefit and defused coffee because the state essentially claims a monopoly all legitimate use of violence and some given area, they have the ability to impose relatively small cost of large numbers of people. and then aggregate the result

and a war that concentrated benefit to small groups of people. we heard some examples. imagine that we had a tax for every american of 10 cents the year. spread out over the course of a year, a tiny fraction of a cent per day. no one would notice that or pay attention to it. we would not feel it at all. but the consequence of that 10 cents per year adds up to about $33 million. that is pretty good money. that will attract the attention of someone to be able to gain access to it. those who have to pay this tiny burton don't even notice it. but those who are in a position to influence the state will be attracted by $33 million available loot to be distributed into their pockets. we can look at this in terms of

rates of state behavior, not just tax system but all kinds of regulations that on the face of it, seemed to have nothing to do with distribution of economic benefits. many years ago challenged by someone to pick through the federal register. it is about 80,000 pages a year of new federal regulations, rules, an edict that will affect your life in some way or another. we open did iran and found a new regulation governing broccoli -- we opened it and found a new regulation governing broccoli. where did that come from? it turned out some broccoli producers sat around and set bob, how big is our broccoli?

that was able to be designated as standard cytoskeleton broccoli, to the disadvantage of their competitors. paris a famous case of a man who had invented a machine that was able to break a for mechanically without breaking the membrane, so you could then store them into this and make omelets and so on and be able to measure the amount in a better way to transport a. you could put them into big tubes, much easier. by accident, he found out that a regulation can now from the department of agriculture making it illegal to use a mechanical device to break an egg. indeed, who was behind that? the restaurant workers union. they did not like the competition in terms of a machine that could break and a and then put it into a tube for transportation.

before kelly was able to hire some legal representation and fought against it. a little innovation was protected. all those that aid records lost their jobs and had to wander off into the countryside and diocletian. i suspect they did other jobs and add more value create there was little cost imposed on all of us. the benefits would be concentrated. we were fortunate there was another concentrated interest, the manufacture of the machine. that found out but and are able to get that rescinded. as a general rule, whenever you find a situation where you can impose a small cost on a large numbers of people and aggregate

the resulting benefits to small numbers of people, you will get rent seeking behavior in transfers of income. the process of civilization has been substantially one of taming power. putting restrictions on these exercises of power. all talk about that in the next presentation. i should warn you sometimes we talk to our friends and it is really depressing. they will give you ever reason why the state will continue to expand forever. every incentive seems to be in favor of the expansion of state power, increasing budgets, more spending and so on. yet has not always turn out like that. there have been very important times when the state has retrenched itself and people have been levelled struggled for their freedom and expand the area of free and voluntary activity.

my next presentation will talk primarily on the historical process by which people were able to impose some kind of limits on the exercise of state power fit let me leave you with the passage from one of my favorite sociologists. it was the very important prominent german sociologists and when hitler came to power he left the country. he had an idea what was coming. not everyone did, by the way. some people had a very strong idea what was going to be coming and left the country. he went to turkey and taught in easton will. then he spent many years -- is taught in. -- he taught in istanbul.

he argued that all of us carry this inherited poison within us, often define perception. all of us are accessories to this original sin that can be excised and erased only with great difficulty and by insight into pathology and can recover by act of remorse. it is our responsibility to try to think what it is to live as free person, not to be dominated by other people, not to be bossed around. the idea that the passport does not give you your freedom. this is an institution that takes control over you. three people do not need to have passports to be able to travel.

the state does not grant you these things. as the signers of the declaration of independence put it, to secure these rights, governments were instituted among men. that has come to be understood by most men as to give us these rights, to grant us these rights, to create these rights. certainly not what the american founders had in mind. we have our rights as free human beings. we may call on governments to secure those rights but increasingly, governments have told us that we are indeed their own creations. without them, we would not be possible. that brings us back to that awful statement from the president, you did not build that, somebody else did that. that is part of that technology that we have to overcome. there is a little bit of time for some discussion.

i hope i may have touched it couple of buttons talking about predatory behavior. thank you. [applause] if anyone like to pose a question about the possibility of social or even without the state, i would be happy to entertain that. >> in your letter, basically you say it intervening on imposing something. heavier every knowledge possibility of a state being originated through the interaction of the people and they recognize the necessity of protecting each other?

is there any sort of different origin for different kinds of states? >> i will repeat it. the question is, the story i told about the emergence of the states we experience today is that they originate in some kind of act of conquest, traceable back to that. could one imagine states that originate through a kind of spontaneous order, or through voluntary delivered acts to securing benefits such as protection of our lives and liberties and so on. absolutely. the distinction i would make would be between states and governments, between state power and governance. we can have rules that are spontaneously derived or that

emerge without any delivered pattern. a lot of those govern our lives. think about the ways in which pathways emerge in jungles. someone walked up with the first time and someone else followed and a little pathway was created, and then people follow it and helps them organize their behavior. there are lots of rules that could emerge spontaneously and we see them all over the world. the principle of first-come, first-served. that seems to be something that emerges spontaneously. people figured that out pretty easily. sit to children down and give them a cake and ask them to divide it. they all figure it out pretty quickly. one cuts and the other chooses. that seems to be something we also along pretty well. it is not culture specific. states are not merely sets of

rules. they are organizations. the firm is an institution, but general motors is an organization. have to emerge in some way through some delivered act at some point. there are lots of institutions that emerged through delivered acts that are not predatory, such as condominium associations, all kinds of ways that we organize our lives. those that do not claim a monopoly:the -- on the legitimate use of force in a given territory. i will talk this afternoon about the emergence of municipal government in europe but has that form. people come together and come up with rules to govern their behavior and invite people to move van and so on and flourish.

it isn't a way of kind of competition with the state principles, so we live with both at the same time. absolutely possible, historically well documented. that is where we should look for the source of civilization, not to those that were founded in acts of conquest. what we need to do is tame them and make them behave more like civil society institutions, voluntary institutions of governance. >> i have done a lot of discussion with people and creating more voluntary solutions. what i cannot get passed in my own head is, let's say we did form along here decided. on one side we have a peaceful

libertarians who are happy to be peaceful and on the other side we have people with really big guns want to take what the peaceful libertarians have. what is to stop the peaceful libertarian nerd from being conquered by the guys with bigger guns? if the answer is an army raised by the peaceful libertarians, then what will stop that army or mercenary group from doing the same thing? >> i was getting at something a little different. a great deal of institutions of law enforcement today are not institutions of the state. even the theory of sovereignty does not describe what we live in the united states. let's take a simple example. who is the captors fugitives, people who have jumped bail? the police did not capture that many of them. that is not their primary job or

responsibility. it is bails bought -- bail bondsman and bounty hunters. the fact is that private downing hunters, private persons, not agents of the state, they do not like violence. it is very costly and dangerous to them. not glamorous or romantic. they are paid to bring back a person by the bail bondsman. in case you are charged and released on bail, you don't have the money to put up, you go to the bail bondsman. he is not an agent of the state, not an officer of the court, he is a private person. that person loan to the money but then says i want your signature on this, you are liable for, and i want your mom to sign on it also, or whatever people around you act as sureties.

then you don't come to court, and what happens then? that is forfeit if you do not show up. he hired someone to go and find you. if that person goes and herbs you, that person as a private person. he is subject to your action against him for having harm you. he has to bring you back all in one piece, healthy, like, to the court. this is not an incentive that the police have. we should be aware of that. the bounty hunter, if he hurts you, he bears liability for that. if he does not bring you back, he did not get any money.

when the capture people? 4:00 in the morning when the person goes outside for a small. they do not come in with guns blazing. they like to resolve the problem and get their money without a. the consequence is that the majority of fugitives from justice are brought back by a voluntary system that is not part of the state. the mechanism does not correspond to that theory of sovereignty that we are taught in high school about the state. we have lots of social order and mechanism that do not rely on the use of violence and force. we get angry about gossip. it is an extremely important social institution that tells us about the behavior of other people. credit bureaus, we could have the government out there collecting every bad debt. they don't. i learned this through a painful

experience could the government will not collected for me. you have to hire a debt collector to go and get the money that is owed to you. one of the ways we deal with it is through credit bureaus. people share information. what does not pay his debts. he absconded with a bunch of money. other people will not loan him money anymore. that is an extremely effective mechanism. does that mechanism, no violence, minimal intrusiveness, get it helps people to coordinate their behavior. there are lots of ways in which we can govern our behavior without resorting to force and violence. the mentality is, the reason you get people to behave better and

by pointing a gun at them. that is the only thing that will work. that works in some cases, but a lot of other institutions can be a veiled up. that is what i have in mind is voluntary forces of social order and less reliance on social violence. i was then a debate on some of these questions and i did a little bit of research. i wanted to find out how many people were killed in any given year by private security guards. and how many people are killed by police who are uniformed agents of the state. the only data i could find that was reliable, it seems virtually no one is killed by private security guards at malls and so on. if you misbehave at a mall, they do not club you down. they ask you to leave because

you are disrupting. you do not get beaten down. but how many people are killed by the police? the department of justice did an interesting study. police officers murdered by felons and felons justifiably killed by police. on average there were about 453 year. in the footnote, what is the definition? anyone killed by police is defined as a felon. in the killing by police is a justified homicide. i get it. this is so embarrassing, the department of justice did not release it in subsequent years. but anyone the police kill in this country is unjustified

homicide. by definition, because there were killed by the police. that cannot be right. i would much rather be stalked by a private security guard at a mall than by any uniformed policeman in this country. >> i was hoping you would make some comments on voter identification standards. >> that is an interesting point through the sangerville -- same people who insist we have to show our id every time we get into an airplane, they resist it when it comes to an exercise of an act of citizenship, which is to say voting. i don't like the idea of a national id card at all. i think it is very dangerous. i do think that insisting that people show some proof that they are qualified voters in a

jurisdiction is perfectly reasonable. i do not have a problem with that. i think it is a reasonable requirement. you should be ample to demonstrate that you are qualified to be a voter and a resident of that jurisdiction qualified to vote for mayor or senator or governor or whatever it may be. i find it ironic that we are forced to carry id for every other purpose, but the same people who are so eager to do that resist the idea of being asked for id to cast a vote. it seems like something is wrong with that. >> you began this morning talking about makers and takers. the most interesting slot i saw was capital investment per employee and wages, etc.. however, the idea of taking,

expropriating money and the capital base, eventually we are broke, like you said. if you don't have capital, the wages will not go up and the continued progress cannot go up. a question is, i don't know how he reached the opinion that we were not broke. >> the reference to the comment, i think we were disagreeing on what it meant to be broke. i think the government is broke. there is a distinction there. the problem is, the government has its hand in your wallet and has the opportunity to access all of your wealth. if you look at it from the perspective of being broke, we do have resources to travel in

the and do things we want to. we are not broke in that sense. i meant that the budgetary imbalance, the difference between what the state has a statutory of obligation to pay in terms of future benefits, medicare, social security in a range of other things, and the expected tax revenue is staggering. at least $80 trillion and probably substantially higher. people are recalculating it to try to figure out the total budgetary imbalance. in that sense, the state is broke. they can deal within a couple of different ways. they can confiscate a lot more wealth. the consequence is less wealth will be produced in the future cryptococcus day. there's a series feedback mechanism there.

the other thing they can do is to fall, as expected obligations. that can take several forms. they can default on the official government debt. that is not unthinkable. many countries have done that and the u.s. might do that in the future, simply default on the official government debts. the other former default is simply not paying what they promised to pay. they may raise eligibility, you have to be 75 to qualify for social security and so on and so forth. finally, another form of default is inflation. you can inflate the currency and diminish the value of the obligations. you just inflate away the body. that is another way of confiscating well. it falls disproportionately on

those who are not able to shield themselves from the effect of inflation. elderly people tend to be hit very hard by that. that is what i meant by being broke. something will be done about it but it will be a combination of more confiscation of wealth, possible default on official debt, and then simply going back and -- on promises that were made to people on the basis of which that made decisions about their lives, which is to say the contemporary welfare state has been built on a gigantic live. it was known for a long time that these obligations could not be met. that seems fundamentally unjust. >> you show the slides for your

book. i was wondering how was received overseas. >> the reviews are very positive. my friend translated for me and talks about wealth creation and virtuous behavior and so on. i was happy about that. my approach on this question is, i would like to help people in iran to achieve a free society. i think that is much more possible with this kind of initiative from civil society organizations and discussion of publishing in persian engaging people rather than crude missiles or threats of war which are likely to entrench the worst elements of the regime there and not to lead them toward more

freedom. i am very frightened by militaristic rattling of swords. i would rather engage people in a different way to help them achieve more freedom. it has come out in a number of other languages as well. i was in helsinki, finland and we have lots of robust debate. the finished edition was a big success. chinese, arabic, turkish, romanian, and gehring, etc. -- hungarian, etc. >> i am wondering if i could get a couple of historical examples and an outlook to the future on privatized courts and polycentric law. >> the emergence of the legal systems of western europe that

are fairly well understood was inherently polycentric. that means a multitude of different jurisdictions that overlapped each other, even at the time of blackstone and his commentaries. he articulates that a number of different court systems functioning in great britain, there was a process of consolidation, but what we call the common-law emerged from a multitude of different legal systems. an example, think about the british monetary system before they went metric. it was a lot of different monetary systems that grew together. anyone old enough to have been in britain and be really confused when you try to make change, are remember my mother said it was the most confusing thing she had ever encountered,

so many shillings and pounds and crowns, and nothing that's up into proper multiples of each other. at the time, the english were well known as being very honest. she would just take a handful of coins and say how much does this cost? the metric system, think about inches, feet, hands, pounds, all these different things. none of them add up to anything that makes any sense. aren't know how many deals in a pint anymore. they grew over time. i like it, even though i do not understand it. i love the british imperial system of measures. legal systems are a bit like that also. only later do people come and try to impose some rational

understanding. the best book i would recommend is but a brilliant professor at harvard law school. it is called law and revolution. it looks at all the different systems and sources of law that interpenetrate each other within europe, that gave us a lot that we have today. i will give one example of one that persists, the international mercantile law. if you do business internationally, you are governed by a mercantile law. there is no state that enforces it as such, but you will find it all over the world. it emerges from the mercantile courts in europe, merchants and traders come to fares and want

to do business. they want quick justice. they don't want to be in court for 40 years. they say i contract it for so much cloth for this amount of money and was not quality. they want a decision and then go home. that produced a very efficient legal system that still functions. you can look in the u.s. today. uniform commercial code is passed by legislatures but created by private law bodies to look at contract locks and say what has been happening in contract law? but new contracts that people been writing? and they codifier it. it was not that that codifier is created it. they went out and said what is happening in a lot? what all the people making contracts are doing.

an italian legal theory is that you make law when you make contracts. you are actually creating a lot. subsequent to that, legislators will pass it as a codification. that is not what gave it its legal force, and they did not created. it is created by people in t market economy. there are all kinds of legal systems today all around us that are not product of the imposition of state power or force. what we need to do is open eyes to be able to see the amazing world spontaneous order all around us. it is just everywhere. the suggestion that the institutions of the state could be diminished or get rid of, and then there would be some fantasy world to discuss how worked.

most of the legal institutions that govern our lives fall into that category. the law itself is not a product of the state. it is fundamentally a product of people exchanging and interacting. we don't have to do any science fiction experiment. we just have to open our eyes to see the real world we live in right now. >> thank you very much. i come from norway. we do not accept that you have been to finland and not to oslo. >> i was then oslo before i flew to finland. i am a big fan of oslo. >> just to relate to, the

presentation of the previous speaker, last year in july i was in south sudan for the independence of that country. the relationship between norway and the community in south sudan has been pretty much decided by focusing on development aid and not so much on business development and the things that create economic development. my question is, how can you create sustainable economic growth in a failed state review do not have the characteristics of what weber describes in his definition, a country like somalia, is always doomed to fail and become dependent on the

international donor community, or are there any prospects for development? >> that is a great question. sometimes when you look at failed state, you can ask why they fail. foreign aid is one of the reasons why some malia fail. there are several very good books on this. -- why somalia failed. one looks at why it was a catastrophe. the dictator in somalia received a great deal of aid that she was unable to use to provide resources to nomadic boat harbor, and then massacred their goats so they became dependent on the eight that was delivered to them. now we had the concentrations of people and constricted them to

invade ethiopic. it was not a wealthy country to begin with but this is one of the ways that really began to collapse. this is one of the reasons for the nightmare of the malia. we can look at what happened then in mogadishu. it is not an attractive place to live, but northern somalia is certainly a lot better. the astonishing violence in mogadishu was largely what were called the technicals. that is what these gangs are called. they have a pickup truck with a machine gun on the back and they've terrorized neighborhoods and extract resources from people. that was technical assistance to foreign aid delivery. we pay for that. with all those trucks and

mounted those machine guns on them, and then it turned out renew the of a young guy 50 caliber machine gun and a truck, he becomes a pretty important person. so we effectively armed are turned out to be these horrific gangs. when the u.s. intervened, you may remember black hawk down and so on. it was a disaster not only from the perspective of american soldiers but the people there as well. local stable equilibrium cannot emerge when you always fear an outside power with the enormous firepower of the u.s. or nato can come in and disrupted anytime they want. people will not make local binding agreement and create institutions of mutual trust and respect and so on. northern somalia, i am not

romanticizing this, it is not as bad. it is much better than southern somalia. no foreign troops, that was the key. local leaders, tribal leaders and elders were able to get together and say let's work out of system so we are not constantly fighting each other. he did not have the u.s. army or other foreign militaries intervening in disrupting them. those people or very lucky. as that do not come here, and u.s. state out. the people and south were unlucky enough to receive all of our systems, which disrupted local institutions that were able to generate more order and legality. our aid has contributed substantially to the creation of

failed states. there are a couple of other really good books on the subject. one documents over and over what has happened. an economist and a number of books in english. the best way to avoid these problems is to stop the aid. that is a bit. then allow trade. get rid of the trade barriers reimpose, as countries. there's an element of the trade initiative that president clinton did and president bush did initiate, allow people to sell their stuff to us. but some do that. reduce foreign aid to zero. i think that will begin the process of healing countries that have been deeply,

grievously wounded by our foreign aid. >> this is a historical question. [unintelligible] a commonwealth means natural order but originally it is a myth [unintelligible]

an element of government that is corrupt. >> can i read it? i apologize, do you have your question written down? could you bring it to me? may i see the question? i apologize. about the ancient greeks. >> the word commonwealth means of natural order, natural society. it described an element of government. >> we will discuss it further

later. that is an important question there. the greek term polis has given us the term political, but we don't use it in the same way the greeks used the term. this is often a problem in political history, to see a word that originated in one context and then is applied to another. this is a classic example of that. the greek polis was a city- state. they were self government. it does not mean that our democracy and our sense of the term. they had different political systems within them. but the greek polis was considered to be the only proper .ay for human being to live o

although i admire aristotle tremendously, we have to go beyond his political science. he thought you could not have a political body larger, more extensive than the voice of the herald could read sheriff i would like to discuss this with you further later on, to get the core of it. the notion that greek institutions of democracy are the foundation of our modern political system are deeply flawed. there is a historical this continuity, in the dark ages, the end of classical civilization. it is only much later that people rediscover the greek texts and begin to take the vocabulary for that context and

applied to different set of institutions and practices. that has led to a little bit of historical confusion as though somehow our political institutions were intimately rooted in greek ones, which is a substantial this continuity. let's talk about that again later as well. le'ron to wrap up in a few more minutes. >> in regard to the narrative you presented today, does that continue into the future? are we approaching an ending point, or you do use c.s. on a longer run tangent toward some ultimate dateless society at some point in the future? >> i am suspicious of all philosophies of history of aiming, some place that it has to be, some end of history.

i do not believe that. what he meant was the final political form of human community has been achieved and note challenge would emerge to it. at the time, i thought it was interesting, but ridiculous. of course there will be all kinds of new challenges and new state formations that we cannot anticipate today, the rise of the radical religious ideologies is a good example of that. it was a surprise to him that these things were still as out there. we find that the enjoyment of liberty often waxes and wanes. sometimes we see the retreat of

civilization and the growth of marxist, predatory institutions. sometimes they are beaten back. there's a constant battle between principles of liberty and principles of uncontrolled power. i do not believe for a moment that the triumph of liberty is inevitable, but also do not think that defeat is inevitable, either. i think it will depend on what we do. i am deeply suspicious of all philosophies that posit some place we are headed to. imagine that we are walking down a hallway backwards, as though we should conceive of the human progress of the future. we can see what we have already been passed through history. we are blind. that is a better image of historical progress.

>> i want to circle back to the discussion on administrative rulemaking and the federal register. i wanted to talk about the fda rat hair list. i wanted to know what are your thoughts on this list and do you think it should be publicized in television commercials so that the american public knows the quality and the education of public administrators that are making these rules customer >> that is where you have government institutions that have taken responsibility for allegedly guaranteeing the safety, and purity of food. but you face the real problem there. that is that there is always the margin of getting an incremental

degree of safety or cleanliness or whatever it may be. you have to articulate standards like that. it is unpleasant to think about how many spider hairs you can have been something. at some point, the limit is greater than all the body they could have been realized in whatever product you are trying to produce. it is not worth it at that point. so all regulatory bodies, whether private or state, will have to establish some kind of standards. the mistake is some help thinking that they are letting all these spider harris go into things. there is not some guy from the fda sprinkling spider hairs on your food in order to meet the standard. they are saying that if you can

keep it below a certain amount, that is good enough. to get it even further below that would be too costly. i think it is a little bit unfair to characterize the regulatory process as somehow responsible for the remaining impurities or safety problems because they established standards. any kind of standard setting has to do that at some point because of the increasing marginal cost of eliminating them. this will be the last one, very quickly. >> i question deals with your argument that foreign aid would help decrease stake failure. is there any net benefit to foreign aid? >> it depends on who the

recipients are. the political leaders love the system, trust me. you can map the flows in and out to a cayman islands and swiss and other banking economies. is very clear, a robust correlation. this is one of the reasons why foreign aid is such a crime. it undermines democracy because their ruler and now knows my constituents are in washington, new york, paris, london, brussels, oslo, not down the street, not my constituents. they are no longer responsive or democratically accountable to the citizens of those countries. they are paying attention to keeping the people paying the bills happy. they do not have to live with

the consequences. the net beneficiaries are the people who live there and the taxpayers to pay for it. the losers would be the bureaucrats who administer it. i spent a lot of time in very poor countries. it is not to say there are no gray people in the united nations. one thing you see is expensive vehicles parked outside the very best bars. it is a great experience to go on these junkets and have an adventure at the taxpayers' expense. we have less than one minute. >> speaking about the greeks and the takers and makers and the previous lecture -- all lost my train of thought. the have anything more to say

about the difference between society and government? political as opposed to social. >> i have a lot to say on that. a human being is described as the animal with reason or speech. when he talks about a man is a political creature, he means essentially greek man. we will talk about society and government later this afternoon. lunch is in the conference center upstairs. at 2:00, we will start again. [applause] >> coming up, secretary of state hillary clinton talks about religious freedom. in the white house drug control policy director on the white house strategy to combat drug trafficking.

later, to events from the cato institute's annual conference of liberty. first, the beginning of economic growth in the industrialized world. followed by tom ahmar on the origins of the state. -- followed by tom palmer. >> thanks for being with us. >> we expect lawmakers will be working on taxes and expansion of the bush era tax cuts. what are republican leaders getting into this now? >> president obama called on congress to take care of the tax cuts and give certainty to the economy and businesses and taxpayers. the senate acted before left before last week and now the house is under pressure to follow suit. they are likely to project -- reject the senate version and pass a version written by republicans.

we are likely to have a stalemate come out of this. >> there is legislation proposing to overhaul the tax debate. is it a total pro out and start over, or how extensive is it? >> it lays down a framework. it does not do the tax reform. it said the process that says by the end of april of next year, here is how we will do a process for revamp of the tax code. it is definitely a house republican version. there are definitely things as senate democrats are not likely to accept. i would view it as a signal that the house is serious about saying we need to get to point to overhaul. we will begin laying out a

specific marker for how to do that. this bill is probably not going to pass, but if it did, it would write certain procedures. >> taxes are not the only thing they are squeezing in going to the break. an extension of farm programs would extend drought relief. what is the likelihood the senate would agree? >> right now it is probably pretty low. the senate is hoping this is a marker that will get them to conference so the senate can take the broad bill it already passed into conference. they hope the house will then match the one-year extension of the current law and then had shot an agreement.

-- hash out an agreement. they are just wanting to get through another year and will come back to this next year. they have not been able to write a bill in the chamber this year. they are just punting on this right now. >> both chambers are also working on a continuing resolution to keep the federal government funded. what are they discussing and why are they taking it up now? >> that is the question facing them, the viewers are familiar from all the time we have spent on the floor. they are talking about doing a

short-term one to get them through the middle of november, or do you just give up for the year and pushed into next year? the key question is how long the continuing resolution will go. conservative republicans are pushing for a continuing six none resolution. the hope they can come back into tighter spending cuts next year. the question is what the senate democrats will do. do they want a push to try to get a few of these bills and done in full at the end of this year? >> the senate is focusing on cyber security legislation. what is the likelihood that centers can finish the bill this week? >> there are a couple of

fundamental questions they are trying to decide. some centers think the underlying bill should be scrapped. there seems to be a consensus that something should be done. the real question is what kind of amendments will be debated on this. anytime you have a broad legislative bill in the senate it opens a chance for other amendments. the real questions are what the business groups do and where they are lobbying, and what other amendments it added or what debate happens on the floor. >> thanks again for joining us. >> my pleasure. >> my pleasure. >> tuesday, a