WBD621 Audio Transcription

Economics in One Podcast with Ben Prentice

Release date: Monday 20th February

Note: the following is a transcription of my interview with Ben Prentice. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Ben Prentice is a producer of What Bitcoin Did and co-creator of WTFhappenedin1971.com. In this interview, we discuss ‘Economics in One Lesson’, the seminal work by Henry Hazlitt. It’s as relevant today as it was when it was first published in 1946. We also talk through the disruptive force of AI, and, of course, we cover Bitcoin.

“It’s the idea that you use logic to come to the wrong conclusion, and because you are using logic, you think you came to the right conclusion…what Henry Hazlitt argues in this book, Economics in One Lesson, is that there’s this network of logical fallacies that mutually support each other and obscure the truth.”

— Ben Prentice

Interview Transcription

Peter McCormack: How are you doing, man?

Ben Prentice: I'm good.  How are you, Peter?

Peter McCormack: Friend, colleague, bitcoiner.

Ben Prentice: I know, I'm a plant, right, paid shill.

Peter McCormack: Paid shill, man.

Ben Prentice: Not in the context of this conversation, but…!

Peter McCormack: How long have we known each other now?

Ben Prentice: Well, do you count when I met you in Boston when you bought me a beer at that bar?

Peter McCormack: Yeah, I remember that.  Danny, can you turn me down just a touch?

Danny Knowles: Yeah.

Peter McCormack: Yeah, God, that was at the event at the MIT.

Ben Prentice: Yeah.

Peter McCormack: You tried to buy me a beer.

Ben Prentice: Yes, and you wouldn't let me.

Peter McCormack: No, I was like, "Fuck off, man, I'll buy you a beer"; God, I forgot about that.  How long ago was that?

Ben Prentice: I think it was 2019.

Peter McCormack: 2019?  Shit, that was four years ago!

Ben Prentice: Yeah.

Peter McCormack: That was a whole cycle.

Ben Prentice: Yeah, it could have been 2018 but I don't remember.

Peter McCormack: We did a whole halving.

Ben Prentice: It was, yeah.

Peter McCormack: It could have been 2018, I think it was 2018 actually.

Ben Prentice: Yeah, it could have been.

Peter McCormack: You know how you can find out?  You find the first show I ever made with Jack Mallers, it was at the same trip, Danny.

Ben Prentice: It was cold out, so it was 2018 to 2019.

Peter McCormack: There was snow.

Ben Prentice: Yeah.

Peter McCormack: There was snow on the ground.  I got so drunk there!  It was a good event, they put on a really good event.

Ben Prentice: Yeah.

Peter McCormack: I did a bunch of really good interviews there as well; I had Jack Mallers on, I interviewed -- my first show with Andrew Poelstra.

Ben Prentice: Yes, I remember that.

Peter McCormack: The legendary Andrew Poelstra.

Danny Knowles: March 2019.

Ben Prentice: That's what it was.

Peter McCormack: So, we're coming to our halving, our halving's about a month away.  Well, listen, man, it's been great to get to know you and great to work with you.

Ben Prentice: Happy to be on the team and I love working with you and I love working on Bitcoin education, however I can be a part of it.

Peter McCormack: Well, you've been a great addition to the team.  I think Danny loves working with you, and obviously, it's one of those things, because you work with us, I kind of forget about the fact that you're a very good guest to also have on the show.  I think for about a year, Danny's been saying, "We need to get Ben back on the show".  I was like, "Yeah, we do, we need to get Ben back on the show, talk to Ben", but here we are; we got you here in person, and we're going to do economics in one podcast.

Ben Prentice: That's the idea.

Peter McCormack: That's the idea, man, economics in one podcast.  I listened to this book, I can't remember who, it was probably you told me to me to listen to it.

Ben Prentice: Maybe.

Peter McCormack: Yeah, I drove from here, in New York, to where's out west from here, Pittsburgh, Pennsylvania?

Ben Prentice: Yes.

Peter McCormack: It begins with a P.

Ben Prentice: Yeah, both of those are.

Peter McCormack: So, is that like a seven-hour drive?

Ben Prentice: Yeah, ish, yeah.

Peter McCormack: Really boring drive?

Ben Prentice: Yeah.

Peter McCormack: Yeah, horrendously boring drive.  So, I listened to it on that drive and then I stayed there and then I went south.  I can't remember, it was years ago, and it's probably a book I should go back to; everything made sense at the time, I was thinking, "Yeah, that makes sense, that makes sense", but why is this a book you shill so much?

Ben Prentice: Yeah, because this was one of the first books I read about Austrian Economics and obviously it's first principled, but I think it focuses on looking at a concept that Bastiat, who was a French economist from even earlier, he laid out the idea of the seen and the unseen and this idea of trying to acknowledge the consequences of our actions.

This isn't like a hardcore anarcho-capitalist perspective, it's more of just trying to acknowledge the real consequences of policies that we might enact, things like that, and it forces us to take a step back and avoid logical mishaps so that we can really know what we're doing with society.  So, I just think it's a great foundational kind of way to approach economics in general.

Peter McCormack: To somebody who's maybe only experienced Keynesian Economics, who only understands Keynesian Economics, for me I studied economics at school, we have a thing called GCSEs and A levels; you do GCSEs up to 16 and then you spend 2 years doing A levels, you do 4 of them, sometimes 3, and one of mine was economics.  A large part of that was Keynesian Economics, and at the time it was taught as truth, it's not a debatable theory, this is economics, right?

Ben Prentice: Right.

Peter McCormack: So, for those who've only got any experience of that, no experience of Austrian Economics, can you explain why there are competing schools and how for you, you consider these different schools; do you consider them as both subjective and one has better arguments, or does one take you more towards the truth?

Ben Prentice: Let's be careful about using the word "truth".

Peter McCormack: Exactly, yeah.

Ben Prentice: I think that the approach of Austrian Economics is to try to be more careful.  The Keynesian Economics is really what most people think of as economics, and I think what Austrian Economics tries to do is take a step back and say, "Wait a second", and it's almost a retrospective, so for me, it's not like one school or the other. 

In my study of Austrian Economics, which I'm not an expert or whatever, what it's gotten me to do is to use logic about the world.  As you said, you learned in school, "Here's some Keynesian principle, learn this, or learn this Laffer Curve and these rules and laws", and I think what Austrian Economics tries to teach you is to use logic yourself to derive things about the world to understand, again like I said, the things that we aren't seeing.

I think the part of this book that actually stuck with me is actually kind of a takedown of Keynesian Economics, and it's right near the beginning of the book he says that many economists, they fail to see the big picture because of, "An intricate network of logical fallacies that mutually support themselves"; so, I'd love to break that down if we can.

Peter McCormack: We can break that down, let's go for it.

Ben Prentice: So, let's first start with what a logical fallacy is, probably a lot of people know, but really simply, it's the idea that you use logic to come to the wrong conclusion, and because you are using logic, you think you came to the right conclusion.

So, one example that's given is you wake up in the morning and you look outside and everything's wet and you're like, "Well, it must have rained, raining's the only thing that could have made everything wet".  But you were here in the city, what if a fire hydrant exploded and literally sprayed everything?  So, here we came to the wrong conclusion, we used logic to come to it, but we came to the wrong conclusion.

So, what Henry Hazlitt argues in this book, Economics in One Lesson, is that essentially there's this network of logical fallacies that mutually support each other and obscure the truth.  So, that's kind of the takedown of Keynesian economists, and he goes through lots of different examples of how they might do that, and it's worse because they all compound on each other.

Peter McCormack: Have these logical fallacies been built up and maintained their positioning, Keynesian Economics as mainstream economics, because of incentives?

Ben Prentice: Yes, absolutely, that's part of it, but it's also just a logical trap.  Like you can kind of almost understand how you'd come to that conclusion that everything was wet, it must have rained, so it's like, yes, the incentives make it worse, but I'm saying it's also easy to make these mistakes.

Peter McCormack: Okay, and before we get into some examples of that, are there any things that Keynesian and Austrians agree on?

Ben Prentice: I don't know if I've studied the stuff well enough to say that; they agree that supply and demand is kind of a fundamental law.  I think that they're two sides of the same coin, they're connected intrinsically.

Peter McCormack: Okay, and why do you think Austrian Economics has failed to be anything more than a niche school of economics mainly appreciated by libertarians?

Ben Prentice: That's a better question, and I think that is due more to incentives.  There was a passage in the book, and I'm probably going to butcher it, but it was something along the lines of, let's say there's a special interest group of some kind that wants to institute some kind of policy and it'll benefit them.  Let's say they'll get government funding for their group, it could be literally an industry or whatever, and because they can maybe petition the government or lobby the government to get this thing passed, they employ all these experts and Keynesian Economists to support their position, and they start outlining some policy and why they think it should be done, and why it's better for society. 

He comes with the idea that there's some writer or some journalist or whatever would see this and say, "That's so laughably bad I won't even respond to it".  But they employ these people for years because the payoff of getting this policy enacted is so powerful that, by the time the argument's outcome is getting close to actually being passed, the writer now comes to respond to it and he can't even keep up with all the arguments and charts and graphs that they've drawn.  So, yeah, I do think it's kind of an incentives problem.

Peter McCormack: Do you think, if we tried to map a school of economics to how we operate as individuals within our home, how we tend to manage our own kind of finances and bank balances -- because we tend to use logic, and I've brought it up a couple of times a recent example is that we've been talking a lot about government overspending, especially in the UK, this is highly relevant because I'm based there, and after making the show with Dan Tubb, he highlighted that the government spends £120 billion a year on debt interest and currently the national debt's increasing by £100 billion a year, so we're becoming increasingly aware of debt.

But I always say, if I had access to a money printer in my bedroom at home and I could keep printing money to buy whatever I want, my Lambo, my house, whatever I wanted to go and get, and no one would know but it would have this kind of microscopic marginal effect on everyone else, would I use it?  I could see times when I would use it.  I don't have that at home, I have to operate with a correct economic model for my family; I have to balance the books; I have to be able to pay my mortgage; if I take a loan, I have to be able to pay it back; everything I do has to be logical.  Do you think we're naturally Austrian economists in our home environment?

Ben Prentice: Yes, but I think the scale of these things matters a lot.  For example, I'm actually really into communism at the scale of a family.

Peter McCormack: Yeah.

Ben Prentice: Have you ever heard this thing before?

Peter McCormack: Yeah, a communist at home.

Ben Prentice: Yeah, and then you get up to each level, and think one of the problems we have in society is that government has just gotten just too big, it's just onerous and it's this giant beast and you can't even turn it off because there are too many pieces to it.  And like you say, the big red button, turning that off is then catastrophic as well, and the same thing with central banking, turning that off would be like 2008/1929 and all these problems ensue.  So, I think the scale is really important on that discussion, but as far as like logic, I think everybody uses logic. 

The tough thing is to not only just avoid these logical traps, these logical fallacies, but to do the work to consider all of the consequences of our actions.  And that's one of the things that Henry gets to in the book a lot, that's Hazlitt, he says that, "The world is full of all of these so-called economists who, in turn, are full of schemes for getting something for nothing".  It's the idea that we'll enact this one policy, but then there's all these butterfly effects down the line that, in order to use all the logic to trace all of effects of this one policy, that's just too much work and that's boring anyway; "I'd rather be a rhetorical politician and say, 'I can do this one thing and it's going to save this one group', and that group is like, 'Yay, awesome'", and then we forget about all the other groups and how it affects them.

Peter McCormack: Because we don't fully understand or appreciate the cause and effect?

Ben Prentice: Absolutely.

Peter McCormack: And because also the people that are making these decisions, the people in government -- and by the way, I'm becoming more and more anti-government, I'm still pro-democracy, I'm anti the current state of democracy.  And what's become a lot more obvious now is the incentive structure within government right now is that it's designed in such a way that they don't really suffer the consequences of the decisions they make; they're incentivised to retain power. 

I watched this great series on YouTube recently about bonds being the biggest scam and that essentially, all we do is from election to election, we go from one party to another promising things which they can't afford and can't pay for, because if they were going to make the correct promises, they'd be saying, "Well, we need to cut spend".  Like, in the UK, we should cut the NHS and we should cut social security; nobody's going to vote for that party.  So, we continue to vote for the death spiral, that's what we vote for, and I think that is the problem, is that the people who are making these decisions with government aren't bound by the consequences of the things they do.

Ben Prentice: Absolutely, and one of the things, the term I came up with after reading books like Henry Hazlitt's, is the idea of whack-a-mole policymaking where you make one policy, and for the same reasons we outlined, it affects some other group somewhere else and then you have to make another policy.  So, like in the 1930s, they were trying to save the farmers and they did all of these things to farms and prices and subsidises and it caused all these other problems, that now they had to change the prices of industrial chemicals to keep the farmers afloat; then you have these tariffs, so like, "Oh, we have to do tariffs on the industrial chemicals"; and then that causes other countries to retaliate with other tariffs, and it creates this web of problems.

It's not like everything's a zero-sum game, but it is kind of a way that everything affects everything in the economy, and when you give to somebody, you're kind of taking from somewhere else, and we just don't always consider there are other things.  And it's funny you mentioned that you're getting more anti-government, and yet I know you say sometimes on the podcast that you're a reluctant statist but believe it or not, Henry Hazlitt, while he makes a lot of arguments against what governments do and he shows a lot of kind of mistakes governments and policymakers make, he actually, himself, was not like a hardcore anarcho-capitalist. 

In the book, he says having a minimum level of government, so maybe Stephan Livera wouldn't be very happy with this guy, but I think that's fine.  I think the points that he's trying to make are so saliant that I'm not even concerned with that part of the conversation of whether or not government should exist.  I just think it's great to examine these things and try to understand what really are the problems with the world because I think a lot of it comes down to these policy decisions and these butterfly effects.

Peter McCormack: Yeah, the reluctant statist position comes from that pretty much every part of the world that doesn't have democracy has tyranny.

Ben Prentice: Yeah.

Peter McCormack: So, that's not to say we can't improve on democracy, but it's not wanting to slip into tyranny, and it's having that ability that I can down to Downing Street, where Parliament is, and I can hold up a sign saying, "Our Prime Minister is a fraud", or any combination or insulting words, I can protest outside government.  I have free speech with certain limitations which we're aware of because I have a lawsuit, but we have that, and you have that essentially here in the US.  I believe it's always under attack, it's under attack in the UK at the moment, the right to protest is always under attack, but we have that.  So, that's my position but that's not to say that democracy is not fragile right now.

But yes, I think I've become more anti-government because I think democracy's been allowed to slide into benefiting the elected over the electorate, and the electorate have not retained enough control; we need to chop a few heads off!

Ben Prentice: Well, that's not the arguments that are made in the book!

Peter McCormack: No!

Ben Prentice: Listen, I am kind of more towards the spectrum where I've been trying to at least entertain the idea of what society would look like without governments, and I think some of the arguments he makes in this book, although he's not making that argument, what is the most difficult part about this conversation to even have in the first place is to imagine what could be that isn't.  This sounds like such a simple concept, it sounds like such a simple paradigm, just, "Oh, well, you're just imagining other things", but what would this society look like without a government?  That's really what he's imagining.  With every single policy that he goes through in this book, he's saying, "Well, what else could have been?"  So, the Brooklyn Bridge, we built the Brooklyn Bridge, it's massive, it's beautiful, the London Bridge in London, it connects two places, that's awesome, but what could society have instead? 

There's the old libertarian trope about more roads, like who will build the roads if we didn't have a government?  I've made the argument before, we as kids grew up watching The Jetsons and having flying cars.  Well what if we, because we spent all this money on roads and just all these messed up incentives that the roads end up costing all this money, what if as a society we could have already gotten to the point where we had flying cars today if we didn't invest so much money in all these government roads?  That's harder to do to make these imaginations; you need this conscious effort of the imagination to imagine what else could be.

Peter McCormack: Well, it's a bit like if you look at what's happened with NASA up until probably around 1971 or whatever the date is, but innovation at NASA slowed down and it's been outcompeted by Elon Musk, what he's done.

Ben Prentice: Crushed it, 100X cheaper, right?

Peter McCormack: Yeah, reusable rockets, the private sector's proved it.  We got Concorde in, was it the 1970s we got Concorde?

Ben Prentice: Yeah, something like that.

Peter McCormack: Yeah, and that fleet has been now retired and we don't have supersonic air travel anymore.

Ben Prentice: Right.

Peter McCormack: We have large or efficient, what is it, 787s and we've just got an A380, but the A380's been retired, so it's the A350.  So, we haven't had that innovation and something's happened with the money which you can point to as being one of the things, potentially, I mean you would.

Ben Prentice: I've done that.

Peter McCormack: In 1971!  That was the first show we ever made, dude.

Ben Prentice: Yes, it was.

Peter McCormack: People should go and listen to that, the WTF Happened in 1971.  No, I agree, and I think we should save this for the end of the discussion because I believe you will always have government, it's just what is the shape of that government?  Are you watching The Last of Us at the moment?

Ben Prentice: No, I've heard so many good things about it.

Peter McCormack: Zombie apocalypse.

Ben Prentice: Yeah.

Peter McCormack: And what happens in a zombie apocalypse?  Groups of people end up coming together, and within that, you have leaders, and you end up having some functioning form of leadership, which is essentially some form of government.  I think you will always have some form of centralisation, people choosing to build some form of governance for a way of groups of people to operate together.

Ben Prentice: Yeah.

Peter McCormack: So, it's what do you get?

Ben Prentice: It's funny because do you remember when we were taking about, I say "we" but you guys who are on the podcast were talking about free private cities, and I think you were talking to one of these gentlemen and you were like, "So, there are no taxes there?".  He's like, "Well, there are these fees that you pay", and you're like, "Well, isn't that tax?"

Peter McCormack: It's a tax.

Ben Prentice: Yeah.

Peter McCormack: It's a fucking tax.

Ben Prentice: He said, "There's somebody that's kind of in charge", but are the incentives different?

Peter McCormack: Yeah.

Ben Prentice: And that's the question.

Peter McCormack: Well, that's my problem with democracy at the moment, the incentive model's broken because people realise, "Holy shit, we can print all this money and we don't have to deal with the consequences".

Ben Prentice: Definitely, but we're still now, we're like, "Oh wait, we do have to deal with the consequences".

Peter McCormack: Well, yeah, in different ways, but there's such a lag on those consequences.

Ben Prentice: Yes.

Peter McCormack: Like the high inflation now, essentially you could say it's been 12 to 14 years in the making from the Financial Crisis, but I think the Financial Crisis made people realise, "Hey, we can just print money and it's okay, we can just print more, we can do more QE", until they ran out of bullets, but yeah, okay.  Well, listen, we should come back to that at the end because that's a good way, but in terms of these logical fallacies, what would you say are the kind of primary logical fallacies, or example logical fallacies of Keynesian Economics which people don't really address, or should be addressing?

Ben Prentice: So, instead of actually answering that directly, what he does in the book is he starts with this seemingly simple logical fallacy called The Broken Window, which is one you'll hear about a lot if you get into this.

Peter McCormack: I remember it.

Ben Prentice: Yeah, you've heard of it before.

Peter McCormack: Yeah.

Ben Prentice: I think it's good to just kind of explain it for folks so they can kind of see one of these happen because I don't think it's this particular example, but then he uses this as like an archetype to then show how all these other things are actually just different forms of this broken window fallacy.  But the broken window's just the fact that let's say we're here in this pub right here and some little kid runs through and he throws a brick through the window and he breaks the window. 

Now the owner, Tom, of Pubkey, he's one of the guys, he now has to pay a glazier, the guy who makes windows, to come and fix the window, and he's to pay, what, $100, $200 or whatever to window man; at the time the book was written it was like $50 but inflation, right.  Regardless, that $200 now goes into the pocket of the window guy, and the window guy, some of that's going to be his costs of materials and his labour, but then he's going to take some of that as profit, and he's going to go spend that at the baker and then, on and on, that money goes through the economy.  So, this brick going through this window has stimulated the economy; has it? 

Well, what we forgot to consider here is the logical fallacy, is we forgot to consider but Tom now has $200 less that he cannot invest in a new higher-end liquor or bring in a new musical act to bring more business in.  And then, when he can't spend that money on that new musical act, well that musician who doesn't have the same money in his pocket and he can't now buy a new guitar, and that goes on and on and on in the other direction.  So, that's the logical fallacies that because we were focused on -- and this also kind of shows you this zero summiness of the economy that wherever a dollar is taken and given, it's this give and take that you can't really avoid.

Peter McCormack: Right, so the logical fallacy is, what you're talking about here is government stimulating the economy by taking money through taxation and using that to create public jobs? 

Ben Prentice: Yes, and one of the examples, I'll try to challenge myself because I think it's a harder one, I think it's one that you'd probably push back on, Peter, is like public housing, for example.  So, this is a tough one because it's like, well, homeless folks or really low-income folks, we want them to have a place to live.  I'm an empathetic person, I might be not an anarcho-capitalist in most respects, but I still want people to have a place to live, so let's divert some capital somehow; any form of government policy that's making a policy housing exist is diverting capital from somewhere else to make into this public housing. 

He lays out some arguments, but the thing that stuck with me that he said about this particular topic, he said, "It deprives capital of the liberty of choice".  So, let's say these poor folks, they're very poor and they need a place to live, instead of being able to choose where they live, now they have to basically take the public housing option, it's free or it's very subsidised, so every other option would be way too expensive, and that's all there is.

Peter McCormack: Isn't there the option of living on the street?

Ben Prentice: There is, yes.

Peter McCormack: So, they have those two choices.

Ben Prentice: Yes, definitely, but what I'm saying is, for the option of taking housing, they only now have really the choice of the public housing.

Peter McCormack: Yeah, but isn't that a benefit to them?

Ben Prentice: Yes, I would say it certainly is a benefit to them.

Peter McCormack: And can that not drive productivity?  So, one of the issues that the cycle that homeless people get into is, say if you're homeless and you want to get a job, you get asked, "Where do you live?"  You need to have an address; you need to have a bank account; you need to have clothes and be able to shower.  So, a lot of people get trapped in a cycle of not being able to escape homelessness because they cannot get work, so putting them into public housing allows them to have an address, a shower and the basics for going to apply for a job, so that could lead to new productivity.

Ben Prentice: Absolutely, and I'm all for philanthropy.  Another way to approach this situation is, if that public housing didn't exist and society was much, much wealthier, like let's give the benefit of doubt to the anarcho-capitalists or at least very minimal government people and say that society's much, much more wealthy because we're more efficiently using capital, and capital's being allocated more effectively, then those folks in those situations would have better opportunities, prices would be lower and maybe because people in general are wealthier, the would be more likely --

Here's the other problem that not only just the people that do philanthropy would have more wealth to do philanthropy, but also because there is this public housing thing already, wealthy people are like, "Well, why would I put even more money into giving people a place to live?  The government already does it".

Peter McCormack: It is a not a fallacy to assume how people will deploy their capital in such a scenario?  How do we not know that instead, they would not deploy their capital on building large fences around their citadels to protect themselves from the peasants?

Ben Prentice: I don't, and that's the challenge of this exercise, is that again, it takes a lot of imagination to know what would have existed, and I think that's the hard part to do; I told you this is a challenging particular point.

Peter McCormack: So, that's why it's always important, I think, to look at the utopia and the dystopia and just compare and contrast what may or may not be, but also look what happens in the world.  The most developed western liberal democracies tend to have good public services to help the poorest and most unfortunate, and when you go to the countries that don't tend to have them, what do they have instead of public services?  They have favelas and slums where there's less regulation on people building shacks for themselves to live in, I've seen it in India and Venezuela, all through South America.

Whereas, somewhere like here, where people try to live in a tent, you go to somewhere like Austin, actually there are laws against doing that, so you get people trapped out of even being able to do that.  So, I think it's important to look at both.

Ben Prentice: Absolutely.

Peter McCormack: And I think, for some people, it's kind of like, "Well, what is the balance?"  I think there is a measure of a civilised society, what it does to protect the most vulnerable and the poorest, but at the same time, that will put up an argument to people who believe all taxation is theft, that some has to be through taxation.  It's a tricky one because I can go all the way down that path of taxation with somebody and eventually get to the point where I'm like, "Yeah, the government deployment of capital's completely inefficient", and I'm with them every time.

Danny Knowles: And I think, to Ben's point there as well, is you say that it's a measure of society how well they look after the needy, but society aren't looking after the needy, that's been taken out of society's hands and the government are doing that without any input from society as a whole.

Peter McCormack: No, I disagree, I think both happen.  I think food banks is a great example, food banks in society, within the UK, I assume you have it here as well, choosing to voluntarily, on a charitable basis, collect food and be able to distribute that to the people who are most needy.  So, I think both happen, and I think that's a great example of the fact you do get voluntary and charitable organisations who will support the most needy in society.  But perhaps a better example would be wheelchair access in the UK, the rules around if you're building any kind of public-use property, it has to be wheelchair accessible.

Danny Knowles: Or private.

Ben Prentice: Yeah, didn't you run into that with your house?

Peter McCormack: Yeah, but that's when you get into the stupid side of things.  Yeah, just so anyone listening, I bought a house, for the house to be signed off by the Bedfordshire building regulations, it had to have wheelchair access, but as soon as that signed off and I own the property, I can remove the wheelchair access, which I have done because it's completely pointless because it's on a gravel track.  So, again, you can see the stupidity on both sides, you can see the benefit and then the stupidity of, obviously, some morons made that decision without thinking it through.

Ben Prentice: Yeah, and we can get into inflation and how that has dragged the poor down in society and all these other things, and how these other compounding problems have put these folks in the situation.

Peter McCormack: Going back to the window, so, that broken window that's cost Thomas $200 to fix, he cannot spend that on something else, that's money's gone.  But the guy who's fixed the window has that money to then go and deploy that capital, so the capital can still be deployed.  Is the main issue here is not the fact that where or how the money is being deployed, it's the fact that one person deploying capital gets to arbitrarily chose how much to take off productive people and to print more if they need it, which distorts the monetary system; is that not the real problem?

Ben Prentice: No, I think what he was trying to point out is the idea that, when we look at the situation of the brick getting thrown through the window and we say, "Look, it has stimulated the economy", by saying now that money went there and there and there to the glass maker and then whoever he spends the money on, to forget that it has taken money out of Tom's pocket; that's the fallacy, is that we've kind of forgot that thread of the thing by saying it stimulated the economy.

Peter McCormack: So, when you extrapolate that to ideas of government stimulating the economy, how does the government really stimulate the economy?  Well, what they do is, well there are two things they could do; they can lower taxation so people have more money to spend, Liz Truss tried that recently and crashed the economy.

Ben Prentice: It didn't work.

Peter McCormack: They can increase taxation and choose to redeploy their capital themselves, or they can operate a programme of QE to inject capital into the economy to stimulate it.

Ben Prentice: Yeah.

Peter McCormack: And I guess the point is we can go through each of those and consider the cause and effect.

Ben Prentice: Right, and I think another point that Hazlitt's trying to make, and that's a good extrapolation of this fallacy, Peter, because I think what he's trying to say is you can't actually stimulate the economy, what you can just do is divert capital from one place to another; when you do that, you get back into that efficiency problem.  So, if we stimulate the X part of the economy, then now people are going to be more incentivised to go into some industry that they probably wouldn't have otherwise, so maybe they're not apt to do that, and just, in general, it's less efficient.  But really the point he's trying to make is that you're robbing Peter to pay Paul.

Peter McCormack: Or you can stimulate the economy, but there are other consequences.

Ben Prentice: Yes, right.

Peter McCormack: So, QE can stimulate the economy, it's been proven to stimulate the economy.

Ben Prentice: Well…

Peter McCormack: But it has tail effects which might be inflation, which you're robbing from Peter to pay Paul, but on a time lag; okay, I'm stimulating it now, but there's a cost later on.

Ben Prentice: I'm not going to argue with the point you're trying to make, but Jeff Snider would disagree with you on the QE part of it, that QE is just some asset swap and it's more of a psychological trick to try to keep banks lending.  But the point you're trying to make is still valid; you're saying it's deficit spending essentially.

Peter McCormack: Yes, deficit spending.

Ben Prentice: Yeah, and I think that's a better way to try to make the point, and yes, absolutely, it can keep up some industries; where are you going to spend that money, though?  That's my point.  Where are we now stimulating?  What's that doing is it's taking away from somewhere else, that's all, just to say it very simply.

Peter McCormack: Yeah, okay.  This is fair.  So, can you give me a modern comparison, because the window's fine, but do we have a modern comparison for that?

Ben Prentice: Yes, so he talks about the farmer, and this is maybe not the greatest modern comparison because it's a little bit outdated, but I thought it was still an interesting kind of anecdote here.  He talks about a farmer getting loans, either directly from the government or guaranteed by the government, and that's kind of really important there because I attribute this similar to student loans where we see the government is guaranteeing these student loans. 

Then we can also talk about the lender of last resort, the central bank, is in a way kind of guaranteeing all loans, because if all the loans go bad, well, what happened in 2008?  Well, all of a sudden, they injected all this capital.  So, the idea that the government is not just giving loans directly, and I don't think we see that as much in our daily life as when this book was written, but that they're being guaranteed by the government.  Here are some of the fallacies that we would say, "Well, the loan basically cost us nothing, it's self-liquidating and money's free so who cares, right?"  But what's actually being lent here is not the money, it's what the farmer uses that money for, and this is weird. 

So, let's say he buys a new tractor to expand his operations, he's going to be more productive because of that tractor; that's great.  But we're not lending the money, we're lending the tractor, and so that's taking it away from somebody else who may have otherwise -- again, we're saying that this loan was deemed by the government -- somebody else may be more qualified to have this tractor and be even more productive than let's say our Farmer John in this example. 

If the government didn't exist or hadn't stepped in in this loan case, then where would Farmer John get the money for the tractor had they not existed?  Well, he'd have to go down to the local bank, and the bank would do their due diligence, or maybe they even know John personally, and they would decide and they would, maybe more efficiently, allocate the capital.  And if they didn't more efficiently allocate the capital, well, what happened?  Their loan would go bad and they would lose the money, so there's that incentive problem coming back again with what happens when a government loan goes bad?  It was like, "Oh, whatever, we'll just print some more".

Peter McCormack: What you're saying it's better to have the free market issue the loans than the government to issue the loans?

Ben Prentice: Yes.

Peter McCormack: But I think we always come back to the point is that the government can always print their way out of their mistakes; they don't face the consequences of their decisions in the same way the market does.

Ben Prentice: Yeah, and that's what's really interesting about this book, Peter, is it was written in 1946 or 1956 or something, he does go back to it in 1978 I think, but most of the WTF happened in 1971 paradigm hadn't really been understood well, I think, by economists, and certainly not by Hazlitt because he doesn't even talk about that.  But what Hazlitt's given us are the tools to now apply his logic to understand that very problem that you're talking about, this one effect of Nixon closing the gold window, or we can trace it back to 1913 and 1929 and all these other things, bimetallism, whatever, all of those things had all these trickledown downstream effects that now are affecting the incentives of the government itself.  So, I think you're already applying the logic in this book.

Peter McCormack: And this is why I'm becoming more anti-government, because what I'm realising is that it's because of these incentives that we are seeing these kind of hints of slipping into tyranny within western liberal democracies as they try to retain control of this re-incentivised system. 

We've seen in the UK attacks on your freedom, such as right to protest.  Right now, we have masses of protests in the UK with regard to wages by public sector workers primarily because public sector workers are in pay bands; if you're in a pay band, it's not if one of you guys wants a pay rise, you call me up and say, "Look, Pete, I want a pay rise", and it's like, "Okay, yes", or, "No", depends how the company's doing, but I make an individual decision.  You're in a pay band; if a nurse wants a pay rise, every nurse has to have a pay rise in the country, therefore they have protest through unions and they have to strike through unions, and we're seeing masses of that at the moment. 

By the way, I support these people, these are hardworking people on the front lines of some of these public services.  I am sympathetic to nurses; I'm sympathetic to fire to fire workers; I'm sympathetic to paramedics; I'm sympathetic to people working on the train tracks; I'm sympathetic to all these people working hard who have seen their purchasing power eroded by inflation caused by the government, completely sympathetic, but they can only protest as a group and they can only campaign as a group, and have they have to strike.  And we're now seeing the government start putting new rules against protesting.

Ben Prentice: In the UK?

Peter McCormack: Yeah.

Ben Prentice: Oh my gosh!  That's scary.

Peter McCormack: Well, they're starting with the paramedics and the nurses because they're saying this is a danger to patient care.

Ben Prentice: Right.

Peter McCormack: It's a risk to patient care, but what they're doing, they're classing their -- so, we had something called a picket line, I don't know if you have that here, and so the paramedics were saying, "Look, if it's a heart attack, we will respond, we will go, we'll go and respond to that, if it's not a life-threatening condition, we won't, we have to protest", so it's really tricky.

Danny Knowles: And the UK Government are now trying to ban what they call disruptive protests.

Peter McCormack: Yeah.

Danny Knowles: But that's the point of every protest, is to disrupt.

Peter McCormack: Yeah, and by the way, those people throwing tins of soup on artwork or gluing themselves to the road, by the way, I think they're fucking idiots and they're completely wrong, I absolutely support their right to protest.

Ben Prentice: Right, but not destroy property.

Peter McCormack: Yeah, look, I don't think you should be destroying artwork, but if you feel so strongly about this that you want to glue yourself to the road, great, if you're wrong, let's get out and let's debate this, right, but I support your right to protest.

Ben Prentice: You have freedom of speech by not freedom of Campbell's tomato soup; yeah, I'm with you.

Peter McCormack: Yeah, don't got and destroy important works of artistic history.  But at the same time, what I'm saying, that is triggering the government to want to limit certain protests.  Let's be honest about this, some of the most important protests in history have required civil disobedience for them to be heard.

Ben Prentice: Yeah, we can think, of course, the Martin Luther King protests and people getting sprayed with water cannons.

Peter McCormack: Yeah.

Ben Prentice: What they were doing was illegal, right?

Peter McCormack: Yeah.  The civil rights protests here in the US were some of the most important protests in the world.  You can go to South Africa, what happened during the Apartheid era, there are some many solid examples where civil disobedience is required, but we're seeing a tax on that; we're seeing a slip into CBDCs; we're seeing people arrested for tweets, literal tweets, people knocking at their door.  That is a slip into tyranny and a place where we say, in the UK, we're a civilised society, we support free speech, so I'm seeing that, and that is a downstream effect of no consequence of printing money, no consequence to the government, which is why, now, I'm the most reluctant statist I've ever been because it's fucking broken.

Ben Prentice: You talked about these wage bands.  For me, what I'm hearing when you say that is these are all just forms of minimum wage.  They're different minimum wages, and maybe it's minimum and maximum if you want to call these bands, that's what you get, but I'm very much against price-fixing your wage, which is weird, because like you said, I'm also sympathetic to folks that have purchasing power destroyed by inflation. 

So, there are multiple threats here, one of which Danny brought to my attention that I want to touch on, but first, it's always good to start with, "The real minimum wage is zero"; have you ever heard that before?

Peter McCormack: Yes.

Ben Prentice: It means essentially, if I raise the minimal wage in New York City from, I don't know what it was, but let's say we've raised it from $15 to $20, now Tom that's trying to pay somebody some wage, he literally now can't because his margins are probably pretty thin; I worked in the restaurant industry, I know.  That might be just enough that he now has to literally let somebody go or he'll take some hours from this person here and take some hours from that person there.  And that's what the saying is trying to say, is that the real minimum wage is that you might get your job lost.

You can kind of go onto the other side of it where you say, well, if we didn't have a minimum wage, maybe some immigrant worker from, pick the most poorest country you can possibly think of, comes here and they can, for $5 an hour, do some job.  It's illegal to pay somebody $5 an hour, but they would be happy to take this money.  Or maybe somebody who's elderly and just wants to work ten hours a week and is happy to take $6 an hour, and if that's mutually agreed upon, then they should be happy to do that.

Peter McCormack: Yeah.  Look, don't take jobs away from people who want to do it and are willing to be paid that amount.  We also need to be cognisant that exploitation can then happen.

Ben Prentice: Well, I think that's an interesting point because the part that Danny saw in the book that was related to this is actually it's related to self-image of the folks that are taking the minimum wage, and this takes a little bit of thinking to get to.  Imagine that you worked some minimum wage job, pick any in your head, probably the things that are coming into your head already is grocery store, McDonald's, whatever.  It's not just that it's one of those jobs.  If somebody asks you what you do for a living, not the first thing you want to say is, "I love working on the fryer later", that's your self-image.

But the point is actually slightly different, it's that, "Well, I'm already making a minimum wage, look, why do I care about this job at all?  I can just go get another one for a minimum wage".  And I think, when you really pull that thread out, you start to realise that it's demeaning to the person to even receive the minimum wage because they don't care, they can just go get another job at a minimum wage, and it's also like, "I'm only at the minimum wage". 

Unless you literally just got out of high school or you're 14 years old and you're getting the minimum wage, and that kid is probably happy to get it, kind of the person coming from that poor country, to really extrapolate the effect of that I think is tough and, Danny, when you brought that up to me, and I was like, "Oh, wow, I think I really missed that through on my read through of this book; I think it's really powerful".

Peter McCormack: Yeah, that is a really good point.

Danny Knowles: In Australia, they have very high minimum wages, and you see that sort of detriment to society that you were talking about a minute ago.  Like, if it's a public holiday, for example, if you work in a coffee shop or something and you're on minimum wage, it might, I don't know, $20, $22 an hour or whatever it is, but then on a public holiday, they have to be paid 2.5 times pay, I think it's 2.5 times.  So, you're paying $50 plus an hour for someone who is the minimum wage, so these cafes and these bars and restaurants, they just shut, and so society or whatever miss that whole industry on those days of the year, and it's crazy.

Peter McCormack: Well look, competition comes down to managing cost, efficiency, pricing, and if you're creating a base cost that prices people out, at that point, it's like, "Well, it's $10 now for a coffee, I'm just going to make mine at home in the morning whereas at $3 I would buy it", and at $3, you might have ten jobs there.

Ben Prentice: Yeah, and we'll put this up on the screen, Peter, when we run the podcast, but this is one of my favourite memes about the minimum wage and about inflation.  I don't know remember exactly what it says on there, but…

Peter McCormack: I'll read it, "In 1964, the minimum wage was five 90% silver quarters.  In 2021, five 90% silver quarters have a melt value of $23.34.  We don't need minimum wages; we need sound money".

Ben Prentice: That's the wage they're calling for, it's $25 an hour, it's literally the call today is we need a $25 minimum wage, boom, that's what it used to be in sound money.

Peter McCormack: Yeah, so again, just to reiterate the point, the only thing I worry about with no minimum wage is exploitation.  So, we have a problem in the UK, it's not a huge problem, but we have a problem which is called modern day slavery, whereby people will bring over a number of immigrants to work in the UK, whether it's picking strawberries, working in a biscuit factory, they all tend to live in a house together, and they collect the wages from and pay these people, but they pay them pitiful amounts, pitiful amounts.  And these people can't speak the local language, they can't leave, they can't get out of that system. 

So, I don't know if no minimum wage makes that worse, or maybe the minimum wage actually makes that worse, that's incentivised these people, but there are times where you could have exploitation, and I think that comes to the bigger question that we'll come to at the end, is what is the role of government; what are the things that they can do, and they do do well, if anything?

Ben Prentice: Well, that's a tough one.  I don't know about this specific situation, Peter, but there's a really similar one here in the United States; have you ever heard of a coyote?

Peter McCormack: Maybe, go on.

Ben Prentice: So, we have a lot of folks that come up from South America, conditions are very poor to work in South America, and it's also hard for people to come here legally.  So, one of the things that happens is they get smuggled in by these coyotes they call them, the coyote.  And in the process of that smuggling, there is often an indentured servitude exploitation component of it, and I wonder if that's really a problem that's created by, first of all, their screwed-up government because stuff's so poor there probably because of corruption, money printing, we saw it out in Venezuela, Argentina, it goes on Brazil, it's crazy.

Peter McCormack: Economic imperialism.

Ben Prentice: Economic imperialism, we can get into the World Bank and the IMF, so that's the problem that created the situation, right?  Or, we can look at the immigration situation, if these were free private cities, maybe there'd be this effective way to enter that you don't need a coyote, I don't know.  So, I think this is kind of an unseen part of it because we're looking at, yes, here's this one little thing where this person's getting exploited, but why did they get into the situation where they probably entered voluntarily, at least at first, to get into this situation?  They weren't literally scooped up and taken over as slaves.  It's often a case where they get themselves into the situation, but why were they there in the first place?  I don't know.  Again, I'm not sure of that specific situation.

Peter McCormack: Yeah.  With regard to public employment, are there any jobs that you think are good and productive and useful, or is all public employment bad?

Ben Prentice: So again, my position is, you're a reluctant statist; if anything, I'm maybe a reluctant anarcho-capitalist, so I try to view the world as if, "Well, what could it be without?"  So, when you'd ask me about that question specifically, what I'd try to do in my head is use my logic and my understanding about economics to say, well, how could this be better without that? 

I'm not saying that, yes, let's definitely abolish this thing right away just because you just said to me, but how could we see the world without that thing?  So, that's often what I try to do, I'm not perfect at it, I'm not a perfect anarch-capitalist, but if you picked one, I would probably try to dissect it, which is what I usually end up doing.

Peter McCormack: So, we're kind of the yin and yang of the situation, but it's interesting, because rather than accepting the utopia, you're challenging yourself to think about what are the downstream risks of this?

Ben Prentice: And it's hard.

Peter McCormack: Yeah.

Ben Prentice: My friends, sometimes they're super interested in it, and sometimes they're like, "Wait, so you just think there shouldn't be government?"  And I'm like, "No, don't worry about that yet, let's just look at how we could have a smaller government, or let's look at the problem with this thing, right?"

Peter McCormack: Well, that goes back to one of my first interviews with Erik Voorhees when he said, right at the very start, and it stuck with me, he said to me, "It's not about government or no government", he said, "Can we just make it 1% smaller?  It gets bigger every year".

Ben Prentice: Yeah.

Peter McCormack: "Can we just get 1% smaller, then 5% smaller?" almost like, if they had a budget and had to stick to their budget, how do we make it more efficient; who knows?

Ben Prentice: Yeah, we talked about inflation, we talked a little bit about prices and incentives there, and I really want to get into two pieces of this.

Peter McCormack: Okay.

Ben Prentice: One is the price system.  I think I may have done this on your podcast before, but I feel it's one of these things that bears repeating, which is the miracle of the price system, that nobody in the world knows how to make a pencil; do you remember this thing?

Peter McCormack: Yeah, I love it.

Ben Prentice: So, there's literally nobody in the world that knows how to actually make a pencil; it seems absurd on its face because it's super-easy to make a pencil, you just take wood, you paint it yellow, you use graphite in the middle band, but it turns out the wood comes from one place in the world and the metal has to be refined from ore, and just to get it out of the ground, you need tools and you have to actually construct those tools, and how do you construct those tools?  You don't know how to construct the tools because you have refine ore again just to get the tools, and the graphite, honestly, I've said this talk a bunch of times, and still don't know where the graphite comes from, I literally couldn't even tell you, so how do you get the graphite to make the pencil?

So, the idea of the miracle of the price system is that it's the actual collective collaboration of thousands of people all around the world to make a single pencil, and it is the prices that signal those folks of what they should be doing.  There's no one coordinator, one central ministry of pencils that tells all these people which thing to make, they just kind of all know what to do, because if they bid too high with their price of their ingredient for pencils, their wood or their graphite, then people won't buy it, so they have to adjust the price to get to the right place.

The prices coordinate human action kind of globally and societally, and I just think that's such an important concept that it's a thread that we can weave into all these -- we were talking about how inflation's, "Oh, it's hard on our wages", or whatever, but the prices guide our actions in every daily life, whether you're going buy this thing or that thing, which job you're going to take, which house you're going buy; we were talking about that before we started the interview.

Peter McCormack: Well therefore, in that, that is every time there's government interference, I'm going to try and repeat something Harry Sudock said, "It's like the vultures kneeling on the necks of the productive parts of society", something along those lines.

Danny Knowles: It was along those lines.

Peter McCormack: So, if they implement tariffs, they are harming one person and one place who can compete in the market for being a supplier of part of the pencil, or if they overtax one company -- that's why maybe it's become too expensive to build cars in America because of certain things that governments maybe have done.  Every time they interfere with the system --

Ben Prentice: You get one step farther away from humans doing mutually beneficial exchange, which by the way is another fallacy that he talks about, the fallacy of zero-sum games.  I mentioned that everything's zero sum, where you're taking from one and giving to another, robbing Peter to pay Paul, but there's also the concept that, if I sell Danny my laptop or my guitar or something --

Peter McCormack: He's not buying that laptop because they're fucking shit; what the fuck is a ThinkPad?!

Ben Prentice: These are really solid laptops, Peter, that's why people buy them, the just last forever.  So, that's why they always look crap, because they actually last forever.

Peter McCormack: Do you want me to get you an Apple?

Ben Prentice: No, I like this thing!

Peter McCormack: What the fuck is that, Danny?

Danny Knowles: I won't be bidding on it.

Ben Prentice: No.

Peter McCormack: It looks something they used to send the first rocket to the moon!

Ben Prentice: But this is the very concept, right, so let's say Danny owns this laptop, somebody gave it to him, and he doesn't like it, he just said he wouldn't bid on it --

Peter McCormack: He would want minimum wage.

Ben Prentice: He would want minimum wage instead, but I subjectively value the laptop differently than he does, so that me giving him the price for this laptop is actually a mutually beneficial exchange, I don't win and he loses, we both win.  Again, it seems one of these silly things obviously, "Oh, you both got what you wanted", but in any given transaction, that we can both win is a really important thing to weave into again all of these conversations in this. 

Peter McCormack: And you said there were two things you wanted to…

Ben Prentice: Well, there's the mirage of inflation, right, so you've talked about this on podcasts a bunch of times, you always talk about Avik Roy with the FREOPP and how he's actually codified and charted out how inflation literally affects different groups of people differently.

Peter McCormack: Well, it has a compounding impact on the poor, and we were actually discussing this this morning.  I re-read that article this morning; we'll try and put in the show notes.  So, it's FREOPP, The Foundation for --

Danny Knowles: The Foundation for Research and Equal Opportunity.

Peter McCormack: Yeah, so they're a thinktank trying to inform government on policy decisions that give more opportunity to those who need it the most, ironic that we would bring that up right now.  But they wrote this fantastic article, it's called The Compounding Impact of Inflation on the Poor, and they said government target 2% inflation, but even that over a stretch of years will negatively affect the poorest in society the worse, he said, "Any amount of inflation".

Ben Prentice: So, this is the problem.

Peter McCormack: Yeah.

Ben Prentice: These things kind of all seems they're disparate, we were talking about the price system, and then we're talking about mutually beneficial exchange and then I was talking about the mirage of inflation, but I think we already took one of your problems that you were talking about, about the workers protesting, and I say, well I think there's an inflation component in this thing, and it's your government policy.  So, there are all these things that are compounded and working together that I think tend to draw society in directions that aren't beneficial. 

It's not always easy to make these connections and bring them together in the first place, and I think that's one of the concepts that is threaded throughout this book, is that a policy will often affect one group at the expense of other groups, and that because we know of the unseen, we can't always see what those other groups are.  We can't see the bridge that wasn't built because this one was; we can't see these things because they don't exist, we don't see them, you have to use your imagination consciously to see them, and then you have to tie all these things together when you consider any economic or political decision that you make.

Peter McCormack: What is the alternative here; what is it you're saying we should be working towards?  We both have that agreement that the big red button is terrible; I first read about that with Scott Horton, I think on their website they've got a thing about the big red button.  If you're a libertarian and you can press the big red button and government is immediately gone, would that be a good or a bad thing?  And I think a lot of people agree it would be bad because we don't know the consequences of the collapse of society, but whatever. 

I like the Erik Voorhees approach, let's do a multivariate test, what can we get rid of, step by step, and reduce the size of government?  What is the ultimate goal here though?  The ultimate goal is, what, to free everyone up from the constraints of people making decisions if they don't understand the consequences, or is it zero government?

Ben Prentice: I think our yin and yang meet in the middle in exactly the same place; we're both, just like Erik, trying to reduce the size of government by 1%, by 2%, and I think in us making this podcast, my goal is to just try to show people that there are things that we are probably missing every single time we make a decision and to question it. 

I don't have the hubris to say that I think I know how the world should be.  We can take any single government that you want to go through, literally right now if you want to, and say, "Well, how could we envision a world without this thing?"  But I'm trying to empower other folks to try to do the same thing and to try to reconsider every single policy; there are probably things that you're not seeing, and I'm not seeing either. 

I try to have some humility in trying to say that I don't know everything, because the people that are making the policies, I don't think they're thinking this, I think they're like, "Here are the lobbies", and they're like, "Okay, well, we've got to do this", and they just kind of do it.  They use rhetoric and they just want to get elected again, I don't know.

Peter McCormack: Well, no, it's an important point, I take this really seriously right now, it's what are we trying to educate people?  If you come to this show and you're already a bitcoiner, that's great, you're going to learn a bunch more here, a bunch of different views, but what if you come here as a no-coiner, or what if you come as somebody who's not that interested in Bitcoin?  I think one of the things I'm trying to move towards is trying to show people that, whoever you vote for, you're not going to make a material difference to your life if that party gets in power.  They're mostly going to be negatively affecting your life.

Ben Prentice: Yeah.

Peter McCormack: Yeah, just at a different measure from one to the other, but the problems we have in society now, whether it's the US, UK, wherever, it's caused by successive governments from different sides of the political spectrum because what they're telling you you're going to do is going to have minimal effect on your life; what they're actually going to do is going to have severe consequences.  But I don't think enough people realise that, they've been sold the myth that, "Vote for this party, it's going to make your life materially better", it's not, they all do the same thing, they borrow too much money, they put us in too much debt, they tax us too much, they steal from the productive parts of society.  I am there and I think the only way you're going to have a revolutionary change is enough people wake up to that and reject government as an entity right now, rather than voting for one or the other.  God, I sound an anarcho-capitalist!

Ben Prentice: You're almost there!

Peter McCormack: Jesus, what's happened to me?!  Okay, talk to me about AI.

Ben Prentice: I think this is a really fun one, and I think it's relevant that I think a lot of people are freaking out today.  Look, we had Andrew Yang on the pod, he thinks the AI revolution's coming, and if we don't get everybody UEI, we're going to have just pandemonium in the streets because everybody's job is going to lost overnight.  Listen, there are threads of this that are kind of true, that a lot of jobs are going to get replaced or reshaped pretty significantly in ways that we're still kind of grappling with today.  Danny and I were having a conversation about AI, it's like, "Damn, this probably going to replace both of our jobs in three years or something like that!"  It's pretty intense stuff, right?

Peter McCormack: Look, there are four people in the room right now.  Whose jobs are replaceable by AI?

Ben Prentice: Pretty much all of them.

Peter McCormack: All of them?

Ben Prentice: Oh yeah.

Peter McCormack: You can make an argument for every single one.  I've gone onto ChatGPT and I've said, "Give me ten questions to ask Michael Saylor about Bitcoin", and do you know what, some were crap, there were two or three I was like, "Okay, there are threads of that".

Ben Prentice: Yeah.

Peter McCormack: You can see, on a long enough timeframe, how that can be replaced.  I don't think an AI can have as good a British voice as I have!

Ben Prentice: It's true, not yet anyway.

Peter McCormack: No, but you can see that.  Have you seen the Rogan AI conversations that have been circulating?

Ben Prentice: No, it's two AIs talking to each other but in the style of Rogan?

Peter McCormack: Yeah.

Ben Prentice: No, I saw something similar, this generative AI stuff, it was called Nothing Forever.  So, you know Jerry Seinfeld, The Show About Nothing, they had this AI that was doing Jerry Seinfeld episodes 24/7, and it was really crappy quality, it looked like really bad animation and the voices were that robotic, this thing and that, and the jokes weren't that funny, but it still did exist until they got shut down for IP violations or whatever.

Peter McCormack: Have you heard the AI Nirvana song?

Ben Prentice: No.

Peter McCormack: Holy shit!

Ben Prentice: Is it good?

Peter McCormack: Will it work here?  Let's try it, see if you can find it, the AI Nirvana song.

Danny Knowles: I don't think AI's ready to be Peter's therapist yet!

Peter McCormack: Here, "AI software creates new Nirvana song".

Ben Prentice: Okay.

Peter McCormack: Have you heard this?

[Song plays]

Ben Prentice: He's not saying words!  If you told me that was early --

Peter McCormack: Yeah, an unreleased --

Ben Prentice: I'd be like, "Yeah, okay, well, that's pretty good".

Danny Knowles: He's not saying words though.

Ben Prentice: I want to hear the chorus.

Peter McCormack: We all just started nodding on that chorus.  Wasn't there more; was there an Amy Winehouse one?

Danny Knowles: Let me have a look.

Ben Prentice: It's funny because it has his angst but a lot of the complaints you hear about the music generated by AI is it doesn't have the soul.

Danny Knowles: Well, it's so homogenised, isn't it?

Ben Prentice: Yeah.

Peter McCormack: Yeah, because it's based on an algorithm, not someone shooting up a bunch of heroin and just seeing what the fuck comes out!  But what I'm saying is, we're in very early AI time, right?

Ben Prentice: Yes.

Peter McCormack: Was there an Amy Winehouse one?

Danny Knowles: Yeah, there's an Amy Winehouse one and a Jimi Hendrix one.

[Song plays]

Peter McCormack: It's got to be Amy.

Ben Prentice: It's got to be Amy.

Peter McCormack: It already sounds very Amy.

Ben Prentice: Wow!

Peter McCormack: Do you know what I mean?

Danny Knowles: This one's way better.

Ben Prentice: It's not even my kind of music but I'm kind of rocking to that.

Danny Knowles: I mean better in terms of more believable.

Ben Prentice: Yeah.

Danny Knowles: If you'd have told me that was her, I would have totally believed it.

Peter McCormack: You see, the point is that unless you buy into me and want to see me, if you're just listening to audio, I am replaceable, actually you could probably AI the video.  What I'm saying is, in the future you might have podcast hosts which are AI.

Ben Prentice: Oh yeah, you definitely will, and it'll be stuff that you want to listen to.

Peter McCormack: And there be a time where we could finish a show, Jeremy can pack up the audio and video and we can go to AI, say, "Just go and edit that".

Ben Prentice: Yeah, agreed.

Peter McCormack: Every job will be replaceable, especially if you have the robots to move stuff around.  I think there's coordination stuff that you still need the humans for, coordinate the guests, but I think the general point is we are moving into a world where you will need less specialists and some entire jobs will be replaced, and so that's a reality.

Ben Prentice: So, is that scary?

Peter McCormack: Well, I mean, it just is what it is; does it make us a better, more productive society?

Ben Prentice: Right, and I think that's where I'd go with this.

Peter McCormack: I think the only scary thing is if there was a sudden evisceration of a number of jobs because you had suddenly a number of people unemployed. 

Ben Prentice: Yeah.

Peter McCormack: We know if you have a sudden crash in an economy, it gets desperate; the Great Depression was a desperate time, people couldn't eat.  So, there is a reality of what that means, but I don't see that happening, I think this is going to be a gradual transition.

Ben Prentice: Right, and I think for somebody like me, well actually, Peter, I don't know if you know that we already use machine learning in our production process; every single show actually gets a significant boost from machine learning.

Peter McCormack: What, descriptions?

Ben Prentice: No, before the ChatGPT, we've already been using this.  So, have you ever synced the audio to a video manually when you're editing video?

Peter McCormack: Yeah, you need the clap.

Ben Prentice: You need the clap, and sometimes, this camera gets off or there are multiple cameras, so the clap doesn't even help you; I've done it by eye a bunch of times.  Actually, Jeremy, our camera guy, wanted to buy something that would help us with timecode and be syncing everything automatically, and Danny and I said, "Oh, we've just been using AI to sync it for a quite a while".  So, with all of our audio, it just feeds in, it listens to the audio from the both the cameras and the thing, and it already syncs it, so we're already using it there.

I think for somebody you, relating it back to what you're doing, I think AI will make somebody like you way more powerful.  You'll be able to produce way more podcasts, you can do it without us, or maybe it will help us in all of our stuff that we do, and not only that, you mentioned less skilled, and I think that's a really interesting point.  The machines allow folks to not have to invest all this skill in setting up a camera or learning how to edit all this stuff.  It allows somebody with a lower barrier of entry to create awesome content, and I think that's great.  I'd love everybody in the world to get a chance to create a podcast like you; how many Peter McCormacks do we not have in the world because they need all these tools, right?  So, that is an interesting way to look at it at least.

Peter McCormack: Well, look, my brother sent me something the other day, he was talking about the first time a steam engine was created, I can't remember what he said, did he say it was used in mining for extraction?

Ben Prentice: Absolutely.

Peter McCormack: It was only after that that somebody realised, "Hold on, we can attach a wheel to this".  And from that tool, what we got is a more productive society because then we got vehicles so we could move stuff around.  My view on AI is I think what it does, it makes us more efficient as a society, more productive. 

Ben Prentice: Yeah.

Peter McCormack: That frees people up to go and do other things.

Ben Prentice: The way that he phrases it, and I think this is actually really great, first of all he says that everybody's saying today, "Well, the conditions are different, we simply cannot afford to develop any more labour-saving machinery", that's what you're talking about.  In the 1900s, they were developing -- well, if AI is literally going to save us hundreds of X labour, that will be way better for society on net, you have to understand that.  I understand what you're saying about the disruption.

Peter McCormack: Look, let's put a slight challenge for that.

Ben Prentice: Okay.

Peter McCormack: If you measure it purely on economic productivity, you might be right, but let's look at Amazon as an example.  I think, if Jeff Bezos could have every Amazon factory operated by robots and AI and no humans in there, able to pick, pack, post and go off in a drone and deliver, he would, and that would be one of the largest companies in the world with hardly any employees.  So, you would create a mass concentration of capital under one person, and so what power does that give them; is any of that power dangerous?  That's something we have to question. 

Does that take away some of our -- you know, it was nice to go to a shop in town, to a bookshop and talk to somebody about some books.  How many nice bookstores have been created and replaced by this economically functional book distribution system?  How many lovely cafés have been destroyed by Starbucks? 

Do you know how this chains use triangulation to destroy other businesses?  So, they go into a town, they open up three, triangulate the town and destroy the businesses in between, and then they'll figure out if they need three, if they only need three, they'll go to two; that's what Starbucks will have done here, that's their theory.  Is there a destructive side to this mass efficiency that we can create?

Ben Prentice: Back in the day when you were riding your horse to work, and oh, you had to go get new shoes for the horse and you had a nice conversation with the farrier who used to put hooves on your horse, well, we took that away from society; are we better off?

Peter McCormack: Yeah, but I think there are those incremental changes and then there are these, God, what's the term?

Ben Prentice: Revolutionary?

Peter McCormack: No, the upcurve.

Danny Knowles: Exponential?

Peter McCormack: Exponential changes; can these exponential changes, because of technology, ultimately be destructive and dangerous?

Ben Prentice: He says that this time it's a different thing, but what we're approaching with exponential curves is the singularity.

Peter McCormack: Yeah.

Ben Prentice: You made a great show about that; we should remind folks; Austin Hill, I don't remember the number it was, but it's about the singularity, and that's where stuff gets a little crazy because the definition of the singularity itself is that it's so exponential that we cannot see beyond it, we can't even imagine, just we're trying to see the seen and the unseen, it's almost unknowable because of the rate of change that technology envisions. 

I got a chance to talk to the developer, so he's the lead at Google, and one of their teams, I won't dox him further than that, he's a friend of the family, and after a long conversation of trying to understand AI, because he works on an AI team there, he said something to me that I will never forget.  He was telling me about how it works and these neural networks, but at the end, he said, "Do you want to be honest, I have a child and she's this old, and I am convinced that she will either live forever or die to an AI, AI will, like Skynet, take over and kill her or she'll live forever because of AI"; it was a binary outcome from him.  That's what you're talking about about the singularity, and we don't know how far away that is.

Peter McCormack: Yeah, because in the singularity, there may be no need for humans, you know it well.

Ben Prentice: You're getting on multiple problems that are coalescing together, there's the AI control problem, can we not stop the AI from doing the paperclip maximalisation, right, you've heard that trope?

Peter McCormack: Yeah.

Ben Prentice: Or it is that, if we don't need humans, are we to the Star Trek level universe where we don't have to have humans work and that we have machines that can do everything for us so that we can literally do whatever we want all day.

Peter McCormack: I think humans need to work.

Ben Prentice: Maybe, but maybe that's us making podcasts about exploring distant planets or something that.  The part of the conversation that we have to at least tie into this, Peter, is that this is Jeff Booth's whole thing.  Remember that along this whole way, what the technology should be doing is lowering the cost, and if we were talking about exponentials, it should be lowering the cost exponentially.  But there's a huge problem here, is that we target, as a number, a percentage that the price goes up, not down.

Peter McCormack: Yeah.

Ben Prentice: We make sure that that technological, exponential deflation cannot happen, we ensure that it does not happen.  There's a whole body of government dedicated to making sure that we can't have prices drop exponentially, and that I think is a massive problem with this whole thing, because that is how we could lead to prosperity. 

Listen, if you talk about 100 years ago, we have taken hundreds and millions of people, probably billions of people out of poverty, I don't know the numbers.  The way that we have done that is through deflation much despite monetary inflation.  We have had massive deflation.  The costs to get somebody food or clothing or whatever have gone down in real terms, and that is what is amazing for society.  So, this is the Bitcoin argument; okay, here's the segue into Bitcoin argument, is that we absolutely need a money that will allow that massive exponential deflation to happen.

Peter McCormack: Can you find that chart where it's got the blue and the red lines for where we've seen price inflate and deflate?  And it's usually things like healthcare is massively inflated.

Ben Prentice: Oh yes, I love that.

Peter McCormack: And it's things like TVs have deflated.

Ben Prentice: Yeah, around the time that I was coming up, with Heavily Armed Clown, the WTF Happened in 1971 site, that was one of my other favourite charts to share, and it doesn't really go with the site, but I know exactly what you're talking about.

Peter McCormack: Yeah, I think it was Lyn Alden where I last spoke about it.

Danny Knowles: I know the chart you mean; I can't find it. 

Peter McCormack: Yeah, well listen, if we can dig it out, we'll shove it up in the show notes.  Yeah, listen, I'm not anti-AI, I'm already seeing the benefits of it.  God, should I confess this?  I'm going to confess this and then you guys will decide if you edit it out.  Jason Maier asked me to write the intro for his book.

Ben Prentice: Oh.

Peter McCormack: Yeah, A Progressive's Case for Bitcoin.

Ben Prentice: Yeah.

Peter McCormack: I'm okay writing sometimes when I get going, but I need the inspiration, and so what I did is I wrote down a list of the things, I will come back to that, I wrote down a list of things I wanted to write about in this intro; it was 12 things.  Then, I went into ChatGPT and I said, "Can you write me a foreword for a book which is 1,200-words long which makes a progressive case for Bitcoin including these key points", which I listed. 

So, I'll try and dig out the original; it's nothing like what I ended up writing, but it gave me a structure to build, and I was like, "That's how I start it, that's how I end it".  So, I ended up taking that and then writing my own version, but just having that structure was super helpful.

Ben Prentice: Well, Peter, I have a confession to make.

Peter McCormack: "I don't do any fucking work, Pete!  I sit at home; I smoke weed all day and the robots do the work".

Ben Prentice: No!  I was going to say that I actually used AI to help me, because the book was written so long ago, it knew about the book, it helped me put all the notes together and actually a lot of points that I've gone over here were organised by AI also, so they helped me do all this.  I had a really busy week, so this actually was a huge help for me.

Peter McCormack: But that's the thing, it's like we're saying these, we're calling them confessions like it's something we should feel bad about.

Ben Prentice: Right, yeah.  No, it's a tool.

Peter McCormack: Yeah, it is a tool that's made the work we do better, the podcast better, it's made us more efficient and no one's lost their job.  I don't see a scenario where any of us goes; I would see a scenario where our roles change and we can do more things.

Ben Prentice: Do more, exactly.

Peter McCormack: We can do more exclusive content for our patreons -- please sign up to Patreon!

Ben Prentice: But that's exactly what I was talking about, it's all the Peter McCormacks that could have existed had they had this tool earlier on that they now, with an iPhone, can make almost the exact same production quality we have, it would be crazy.  Maybe I'm hyperbolic a little bit here, but you understand the point that what if somebody with an iPhone could make the same level of show that we make for zero cost, that's the idea; how much better content would we all have to work and to think about to learn about?

Peter McCormack: Yeah, so I guess one of the things that AI can do is level the playing field, which the internet did, by the way.

Ben Prentice: Yes.

Peter McCormack: Right, so, look, pre-internet, could you start a media company; how the fuck would you start a media company pre-internet?  Actually, I did once, because I started a fanzine; when I was 15, I started -- do you know about this?

Ben Prentice: No, you've talked about it I think.

Peter McCormack: Yeah, I started a fanzine, it was called The Plug, I only did four issues, but I go out and interview bands and review CDs and print it and give it out; that was me doing a media company.  My problem was distribution; the only way I could distribute it was at concerts, and I had to get people to pay 50 pence for it, but that was it; I used to do a few hundred per issue.

When the internet first came about, because I stopped it when I was 17, when I did my A levels.  I went to university, I discovered the internet and I learnt to code HTMLs, I was like, "I can recreate this as a website and I've got global distribution immediately, how great is that?"  Now anyone can create a media company; our numbers are probably better than a lot of mainstream TV channels, this podcast.  We make this as a six-person company; what's AI doing?  AI's making us even better.  So, like you say, it's opening more opportunity for more people to be competitive, and actually, kind of changing the incentive structure.

Ben Prentice: Yeah, I totally agree.  Listen, I'm super bullish on humanity, I'm bullish on technology; I've always been a technologist, and it's funny, because the same way I'm trying to find myself defending anarcho-capitalism to my friends, now I feel I'm trying to defend AI.  I'm like, "Well, listen, this technology does exist". 

It's kind of like Bitcoin, it's the cat-out-of-the-bag kind of situation where you can't put it back in, and what I do want to see, I think what is important for us to consider, is to make sure these things are as open source and available and customisable as possible. You've seen that stuff about OpenAI kind of changing and ChatGPT is kind of biased in some ways, I think we should try to minimise that as much as possible.

Peter McCormack: Yeah, where's that's coming from; is that them putting it in the pot?

Ben Prentice: Yeah, it's safety.

Peter McCormack: Yeah, and I've seen responses, I think I saw something today about not allowing sexual relationship conversations with the robots or something.

Danny Knowles: I saw one on Twitter, I've not done this so I'm not 100% sure it was true, but I saw on Twitter asked it to write something about Trump and write the same thing about Biden, and I think it was about why they were a good president, and it refused to write about Trump but it did write about Biden.

Ben Prentice: Yeah, and they had some justification, it was something along the lines of, "Oh, well Trump instilled violence once, so we don't want to promote violence so we're not going to promote Trump because he promoted violence", and that was the reasoning.

Peter McCormack: But that's putting human decisions in the way of it.

Ben Prentice: Yes, and this is what I'm saying, it's we need to find ways to -- right now, the technology just to even run this software is outside the level of a consumer.  You know there's image generation AIs?

Peter McCormack: Yeah.

Ben Prentice: I run one of those on my computer, that's easy, but the language model is so big and hefty that it's $50,000 or something to run one of these, so that's a whole Tesla, that's outside of the range of most people, but there are ways to kind of more democratise it.  It's scarier because it'll say things that are unsafe or whatever, as they would deem it, like, "Oh, Trump was a great president", maybe there are some people who deem that as unsafe, or you can think of lots of other unsavoury things you could get it to say.  Ultimately, we need to democratise that because I think having it centrally controlled is the scary part to me.

Peter McCormack: Well, what is that; what am I looking at?

Danny Knowles: Ben?

Ben Prentice: I had a friend over and I said, "Okay, well, if you want the AI to create whatever you want to", he said, "Make an MC Esher painting about bricks but in the style of Picasso", and it's not bad; it generated a bunch of them.  Sometimes the idea with these is like, as you kind of saw, Peter, there's one good idea in ten or whatever, so sometimes you just generate a bunch of things from an AI and you pick out the one good piece.

Peter McCormack: I guess the saddest part of it is when we get to the point you don't know what you're reading.

Ben Prentice: Yes.

Peter McCormack: Is it BuzzFeed who have said they're letting a percentage of their staff go because they're going to be generating less through AI, and their stock price went up?

Ben Prentice: Wow!

Peter McCormack: I think I heard this on Rogan recently.

Danny Knowles: Well, AI stock's have been going crazy anyway.

Peter McCormack: Yeah.

Danny Knowles: But the thing I worry about is that it is bland and homogenisation of content, that's the concern I have.  So far, what I've seen hasn't been anything incredibly interesting.

Ben Prentice: You know what's interesting too is that the value of that content I think actually changes a lot.  When everybody can have a podcast at the level of Peter McCormack's, Peter McCormack's isn't as good, and then the same is true with the images.  It's really fascinating when you sit down in front of the computer and you generate a bunch of these imagines because the first one you're like, "Wow, that's amazing!" and then you get to the third one and you're like, "Oh, okay", and you just start scrolling; it almost devalues the art. 

There are two sides of this; one is that, listen, everything is subjective, we know value is subjective.  You might value modern art more than I do, for example, but you kind of devalue the AI's art in your head a little bit, and that happens, but also that other part about raising everybody up, it changes your perception at the very least.

Peter McCormack: Yeah, but it's a bit I think NFTs have devalued modern art because when stuff's too easy to produce and so much of it's been produced, it loses value.

Ben Prentice: Yeah, but NFTs don't change anything about art, they just change the way people collect it and they trade it.

Peter McCormack: No, I think they incentivise to mass create new collectable arty things, penguins, fucking bananas, whatever it is, whatever bullshit.

Ben Prentice: Okay.

Peter McCormack: No, and the reason it bothered me is, NFTs were pushed as the saviour of artists themselves, the pained artist who earns no money can now make money because they're getting ETH donations, but actually all it was was loads of people pushing whatever collectable it is at that point, but was there any real value in it or is it just a FOMO?  I just think it just, I don't know.

Ben Prentice: Well, Peter, you know what Junseth would say, "Is there any real value in a Babe Ruth card or a Beanie Baby?"  And this is a really important point, I think, listen, there are people that want to collect these NFTs, we're seeing the boom of it, we can briefly touch on it; there's this boom of it on Bitcoin.

Peter McCormack: Can we just not because I just, fuck that --

Ben Prentice: Just really quickly I just want to say that, listen, I think that that has already started to die on ETH in some ways, it's coming over in Bitcoin currently, but I think that, ultimately, these things are scarce but it's an illusion.  I think the Babe Ruth card is more interesting, and I don't think Babe Ruth cards are interesting, I'm not into baseball cards, I'm not into Beanie Babies, and I don't think it's saving artists, I don't think any of that's going to happen.  I think AI, if anything, is going to change art a lot more than NFTs do.

Peter McCormack: You said you're not into Babe Ruth cards; I collect sneakers.

Ben Prentice: I know you do.

Peter McCormack: Trainers.

Ben Prentice: But I don't, I don't think it's that interesting.

Peter McCormack: Yeah, I do because I wear some, I've got my Reverse Pandas on today; I bought three pairs of these.

Ben Prentice: I think my point about the NFTs as it comes to Bitcoin is that, I think we are seeing it die on ETH, not because we found out the jpegs were stored on chain, I think that was more of a speculative bubble.  You've seen crypto do this, it's shifted from one scam, if you want to use that word, to the next where, at first, it was all the Bitcoin competitors, and they don't do that any more, they don't really compete with Bitcoin any more.

Peter McCormack: Then it was ICOs.

Ben Prentice: ICOs, right.

Peter McCormack: Yeah.

Ben Prentice: And then what?  Well, basically, there was the Binance Chain BNB ones, but now we've kind of moved to NFTs, probably next we'll be moving more towards games; there are games, people trying to integrate it on.

Peter McCormack: It's trying to find a problem for a solution.

Ben Prentice: I think so.

Peter McCormack: Yeah.

Ben Prentice: And I think it's a problem of inflation, believe it or not, that I think Bitcoin actually experienced plenty of inflation in its early days, massive amounts of inflation which massively distributed capital in weird ways, and there was all this malinvestment, which is another Austrian Economics term.  But I think this money's still kind sloshing around, and as Bitcoin isn't really sound money yet, like we say, "It lost 70% of its value in the last year", or whatever, it's not sound money, it's still trying to find its way and become money, that as it does that, that money sloshing around is going to go into weird places.  I don't think the NFT craze is here to stay, personally.

Peter McCormack: I just find it so uninteresting. 

Ben Prentice: Yeah.

Peter McCormack: So many people are talking about it on Twitter and arguing about it, and I've seen both sides of the argument, I've seen some quite trolly stuff, I just don't care.  And the reason I don't care is I don't care for NFTs on Bitcoin because I'm not going to buy any of them.

Ben Prentice: Right.

Peter McCormack: I don't care about that.  Then, when there's the argument about wasted block space, I care more about that as a sensible discussion, but I don't care because other people are going to argue and solve that point.

Ben Prentice: Yeah.

Peter McCormack: It's just going to get solved.  People will make a show, and we're going to make a show, we've got Rob Hamilton coming in, haven't we, we're going to talk about it, and I should care, and some people listening will go, "Oh, fuck, you don't care", I've just found it, "Is this what we're arguing about now?"

Ben Prentice: I'm with you on that, but what I tried to say, I don't know if you caught this, I was saying I don't think that it's interesting that they're on Bitcoin now, because basically people are like, "But they're on-chain now, the whole jpeg's on-chain so you actually own it".  Do you agree that NFTs have really fallen from that speculative craziness on ETH and all that previous stuff?

Peter McCormack: Yeah, of course.

Ben Prentice: Do you think that that actually fell before people realised that their jpegs weren't on-chain?

Peter McCormack: No.

Ben Prentice: I don't either.

Peter McCormack: I think it fell because it went through a hype cycle, speculation bubble, and then there was a massive oversupply and then people wanted to sell.

Danny Knowles: People ran out of money.

Peter McCormack: Yeah, and now what have you got left?  Probably the only things that have got any kind of real value are maybe some Punks and some Bored Apes, and which, do you know what, in some ways, Punks were the one things I didn't mind because I thought, "That's some cool pixel art"; I actually kind of thought they looked cool.

Ben Prentice: Yes.

Peter McCormack: But at the same time, I would never buy one, because the only reason would be to buy it is because I want to sell it on and hopefully I can make some more money, but I didn't want to get into trading it, and I never bought the idea, "But you own the hash to it".  I don't give a fuck, I don't; I can copy and paste it, I don't care.  And then they go, "Well, you can copy a Rembrandt", no that is literally a print; they are not the same thing, stop trying to say they are the same thing, this is a pixel-by-pixel exact copy; you cannot copy the brushstrokes, shut the fuck up.

Ben Prentice: Yeah, and do you think, Peter, that if Bitcoin doesn't have a fee market in the future, will Bitcoin survive?  We think that the fee market will happen, and if it does, then you realise --

Peter McCormack: Bitcoin does have a fee market.

Ben Prentice: Right, but you just touched on it with the Sam Wouters episode where they were looking at how much was fees and how much was subsidy.

Peter McCormack: But it's going up every cycle, right?

Ben Prentice: Absolutely, that's my point, is that if you follow that trend, you know that these things will be priced out for most people.

Peter McCormack: Yeah, but I think those who are wanting to have these jpegs on Bitcoin because they take up the supply of the block space, and that means miners getting paid, etc, I think that is a high time preference fiat thinking coming into Bitcoin.  Bitcoin has been absolutely fine cycle after cycle after cycle, we're still here, miners are still making money; it's $22,000 for a Bitcoin right now.  If you're a cycle maximalist Rizzo, it's working.

Ben Prentice: Yes.

Peter McCormack: I do not think we need to choke the chain with jpegs as a justification for miners getting paid.  Miners need to be more efficient or get the fuck out of here.

Ben Prentice: I'm with you on that, I'm just saying there's nothing really fundamentally that's changed.  You could put data in an OP-RETURN; if there were 80 bytes of data, so 80 bytes isn't enough for a jpeg, so you could have strung a bunch of these OP-RETURNs together and it would have costed you money.  What's changed is that, well, you can do that for a discount of one half now.

So, Andrew Poelstra actually posted this, and I saw it, it was a great response, is that essentially, if you're bullish, and he didn't say this, he made that point that it's only a 1X discount, so that if you are bullish on Bitcoin's fee market, and basically Bitcoin working because we need the fee market for Bitcoin to work, then you're not bullish on these things, that's all.

Peter McCormack: Yeah.

Ben Prentice: And it'll be completely priced out.

Peter McCormack: We've gone on a massive tangent here!

Ben Prentice: Yes, way too big.

Peter McCormack: We need to bring it back.

Ben Prentice: A huge tangent.

Peter McCormack: I said to you earlier on, I think a lot of this comes down an efficient economic system versus a society that better functions with a central government; that's the debate.  I think the anarcho-capitalists will say, "We do not need a government, everything will be fine, and the government causes more problems than things it solves", and then other people would say, "No, because without government, you might slip into tyranny or you have greed or pollution, all these other effects whereby there are regulations that are controlling them"; how do you weave that? 

In the end, I think that's the biggest argument for some people, the statist cuck thing comes from the fact that I always struggle with that idea of no government.  The DuPont was the example I always use; they poisoned the waters, they didn't give a fuck, chemical production, they poisoned the waters, they caused lots of cancers.  If there is no regulation around chemical companies, how much pollution will they cause? 

The Fifth Risk book that I read, talking about the regulation of nuclear material, what happens with that without centralised governments?  Nuclear power stations, do we have higher risks of things a Chernobyl or Three Mile Island, Fukushima?  What about weapons; who can get weapons; what weapons can they get?  I feel there is a certain amount of centralisation that is good around certain things like that.  I also think you cannot get rid of government because if you get rid of government, you replace it with a new government, and that might be worse.  You know what, I don't know, I worry about that, that's my concern.

Ben Prentice: And I actually think that's one of the places where I might have trouble arguing the anarcho-capitalist view also, is we've read about the free market courts in, I think, For a New Liberty: The Libertarian Manifesto, he goes through that, and it's well, there are two sides to this.  Well, a free market court sounds for-profit courts, and it sounds the guy with the most money wins.

Peter McCormack: Yes.

Ben Prentice: But then again, isn't that kind of how it already exists?  If the guy has a lot of money, not always, obviously, the truth is on our side in a lot of cases, but a guy with a lot of money can throw around his weight and sometimes cause undue hardship through the court system already.

Peter McCormack: I've experienced that.

Ben Prentice: Absolutely.  So, I don't know, and I don't know what that would look like, and I agree with you, but what they would also say is that causing harm through releasing chemicals, you mentioned the DuPont thing, through nuclear waste, that would cause harm to other people, that's violation of the non-aggression principle and that that would be dealt with in that manner.

Peter McCormack: But non-aggression principle, firstly, everyone has to agree to it and we are violent animals, so let's be honest; and for the non-aggression principle to have any validity requires government.

Ben Prentice: It requires some kind of structure of society to deal with that.

Peter McCormack: Some agreement on rules, what that means and how they're dealt with.

Ben Prentice: It's more like, well, what causes harm?  So, today, bear with me for a second, Peter, so at least in American courts, there's the idea of precedent and that a court sets some kind of precedent and that things are derived from that, and then it's not a rule that, "Oh, obviously John broke X rule", it's that we have this precedent that kind of exists because we understand this logic and we derive other things from it; that's the idea of the non-aggression principle, it's not that, well now we need all these rules that tell you what is an aggression and what isn't. 

The hard part, though, where I'm sympathising with your rejection of this notion of the non-aggression principle just solves everything, is that it's not clear exactly what we would determine through a very efficient society, that now that we have this perfect society with these perfect free market courts and all this perfect capital allocation and this utopian kind of idea, that we would know exactly how does that work like that, the structure of it all?  And we don't know that, that's the unseen, and I don't have an answer for that, I just don't, and I'm sorry.

Peter McCormack: What the fuck did you come here for then?!

Ben Prentice: I know!

Peter McCormack: Jesus Christ!  No, look, the Erik Voorhees thing is perfect, let's just go 1% less.

Ben Prentice: I'm with you.

Peter McCormack: Let's constantly go with that and see what we need and what we don't need.  We know we kind of need the borders at the moment, let's stick with the borders for the moment; let's keep the police force just for the moment, let's see what works and doesn't work.  But for me, the big lesson isn't do we need government or don't we need government, I don't think we're getting rid of government any time soon, it's just not happening, let's face facts.  I fully expect, in my entire lifetime, there will always be government, so what can I do that's more effective? 

Okay, can we influence government to be better by educating more people about what money is, how it works, how the incentive model of government is so utterly screwed and causing so many kinds of weird incentives that affect us all?  I think that's a much more productive thing because maybe we will get a revolution, some form of revolution that will force governments to be better when we just get away from left versus right, which I've been sucked into, and go more to the them and us.  They are the elected, we're the electorate, can we enforce and get better from them?  Perhaps, through this kind of education, we will.  So, that is my hope, Benjamin Prentice.

Ben Prentice: That's my hope too, Peter, and I think folks can ignore Bitcoin as long as they want, and the longer they ignore it, the less of the massive incentive there is adopt it early, but also the better it works when they do adopt it.

Peter McCormack: Yeah.

Ben Prentice: So, the bigger Bitcoin gets, the better it gets at doing what it's supposed to do, and then it kind of just wiggles its way into all these incentives and helps heal some of those things the way that Jeff Booth talks about, the incentives of money and the distortions of money, it kind of just starts to heal those things.  Again, there's not that early, from 2012, 1,000X gain that you're going to get, but at the same time, you don't get the 70% drops as much.

Peter McCormack: Exactly.

Ben Prentice: So, I feel it just will work eventually, but the more people who can help understand and help people into Bitcoin the better it is, and that's why I work with you.

Peter McCormack: Viva la revolution.  Ben, love you, man.  Thank you for coming and doing this.

Ben Prentice: Thank you, Peter.

Peter McCormack: Danny, anything to add?

Danny Knowles: No, that was all good.  Thank you, Ben.

Peter McCormack: All right, man.  Well, listen, thank you for coming in, it's good to see you; I haven't seen you in person since Miami?

Ben Prentice: Yeah, I think so.

Peter McCormack: Yeah, okay, man.  Well, listen, take care.  Where do you want to send people?!

Ben Prentice: If you go to whatbitcoindid.com or Patreon!  I mean, you can find me on Twitter and Clubhouse, so I'm @mrcoolbp I think on both; I'm on Clubhouse every day, hanging out, so come hang out with us there, screw Twitter.  Peter and I are both trying to learn Nostr, we're boomers when it comes to Nostr, so give us a minute.

Peter McCormack: Dude, it's taken me about a year to get all the plebs out of my face on Twitter and their bullshit, and now someone goes, "Got a Nostr?" and I'm literally like, "Fuck you, fuck this!"  Oh man, but listen, I'll give Nostr a go.  Ben, thank you, I'm glad I met you in Boston when I did and I'm glad you work with me; our four-year anniversary is coming up.  Keep crushing, man.

Ben Prentice: Thanks, Peter.