Monthly Archives: July 2015

Even more on Say’s Law and Austrian economics

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The debate on the Coordination Problem website continues but see here and here for the prior discussion. The following three posts have just been put up.

Hayek detailed the influence of classical political economists on his theory of the business cycle. See the 1st chapter of Prices and Production. Many predecessors are mentioned, just not Say.

In Economics as a Coordination Problem, I suggest that Say is relevant. But it is Say’s theory of the entrepreneur that is relevant.
Posted by: Jerry O’Driscoll | July 18, 2015 at 08:35 PM

James Mill did not use the term “Say’s Law,” preferring the “Law of Markets,” but he and Say corresponded and they each cited the other in their works.
Posted by: Barkley Rosser | July 18, 2015 at 11:17 PM

In the WN, Adam Smith argued that “parsimony” was the immediate cause of “the increase of capital.” That is an ex ante version of what came to be known as Say’s Law.
“What is annually saved is as regularly consumed as what is annually spent, and nearly in the same time too.” In other words, the supply of savings constitutes the demand for investment.
Even earlier, there are statements by the Physiocrat, Mercier de la Rivière, that anticipate Say’s Law. And so on.
Posted by: Jerry O’Driscoll | July 18, 2015 at 11:55 PM

Again it is Barkley Rosser who sticks to the issues to whom I focus my reply.

It is not a little odd to be instructed by Barkley Rosser that James Mill and J.B. Say corresponded and cited each other’s works. I have written one book, many articles, and brought together two collections of writings on Say’s Law, including a five volume set on everything written on Say’s Law through until the year 2000. Of course James Mill didn’t use the term “Say’s Law”. The phrase wasn’t even invented until the twentieth century. That he discussed “le loi des débouchés” (the law of markets) is different since that is the name he applied himself. That still doesn’t answer where Keynes came up with the term Say’s Law since that is from F.M.Taylor (1921). Those who think they know the story of how Keynes went from the Treatise (1930) to The General Theory (1936) typically ignore this very inconvenient fact.

Say’s Law does not mean “goods buy goods”. What Say’s Law means is that demand deficiency (overproduction) does not cause recessions and therefore a demand stimulus is never the remedy. Everyone once knew that goods bought goods – see the second paragraph of the introduction to Book II of The Wealth of Nations where it is spelt out with perfect clarity.

For an indubitably Austrian perspective on Say’s Law, let me then direct you to Murray Rothbard in an article specifically titled “Say’s Law of Markets”. It is mostly right but Rothbard is unfortunately caught up in the trap of thinking that Say’s Law was originated by Say, or worse, that Say explains it properly. But here he is absolutely on the money as he is on most of the rest in his article:

“Essentially Say’s law is a stern and proper response to the various economic ignoramuses as well as self-seekers who, in every economic recession or crisis, begin to complain loudly about the terrible problem of general ‘overproduction’ or, in the common language of Say’s day, a ‘general glut’ of goods on the market.”

And please take note of the technical term he uses, “economic ignoramuses”. I understand the exasperation, especially in the face of yet another massive failure of policy in the various Keynesian stimulus packages that followed the GFC.

That no one gets it is as normal, but perhaps, by pulling Murray Rothbard into the mix, there might be some recognition that Say’s Law has a legitimate Austrian pedigree.

More on Say’s Law and Austrian economics

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The conversation on Say’s Law continues at The Coordination Problem website. These were posted following my own post yesterday. Neither of the posts are anything other than assertions with no actual text references, but they do raise issues that are raised all the time. But the second, from Barkley Rosser, gets into the issues that truly matter.

Actually, Hayek viewed Say’s Law as an equilibrium concept. He argued it did not hold in a monetary economy because money allows there to be demand without supply. One could say the denial of Say’s Law in a monetary economy undergirds Hayek’s monetary theory of economic fluctuations.

It is not clear that the Law originated with Say. It already appears in the Wealth of Nations.

Then there is the question of whether Say changed his mind. In the fifth edition of the Treatise, never translated, Thomas Sowell argues that Say changed his mind about the Law.

Finally, Mill’s Fourth Fundamental Proposition Respecting Capital is at the heart of Hayek’s cycle theory. Hayek clarifies that in an Appendix to The Pure Theory of Capital. And I analyzed its relevance in Economics as a Coordination Problem. It is not a forgotten concept.

Posted by: Jerry O’Driscoll | July 18, 2015 at 02:43 PM

The quote that Kates provides from Mises is peculiar. It is clearly a criticism of Keynes, but aside from declaring that Keynes failed to disprove Say’s Law, he really provides no defense of it or how it fits into Austrian economics.

I am interested to see that Steve Horwitz basically that the main Austrians said very little about it, and one has to go such figures as Hutt to find much, with followups by Steve himself and some others.

I think Jerry is right that Hayek probably did not accept it in a monetary economy.

Mill took it very seriously and spent much time talking about it and relying on it in his arguments.

Regarding Say himself, he may have changed his mind on it, but from the very beginning he always recognized that it did not universally hold and gave various examples of how and when it might not hold, most of these involving people hoarding money for some reason or other, such as in the Ottoman Empire not to have to spend more on taxes if one engaged in conspicuous consumption, although one can find numerous quotes from him in various places where he certainly states some version of it. As it is, I think it was James Mill who coined the term and promoted it in the English literature, thus making it not too surprising that his son would also be an advocate of it, although I may be mistaken on this last point (and I accept that versions of it may well have been around earlier).

Posted by: Barkley Rosser | July 18, 2015 at 05:31 PM

Understanding Say’s Law may be as difficult an issue as it is possible to find in a world where every economist is taught Keynesian aggregate demand as their first approach to thinking about the nature of recession. Say’s Law is the essence of supply side economics. At the aggregate level, demand has absolutely no role to play. What demand there is originates with supply and can come from no other source. Public spending unbacked by real production is no more a stimulus than the printing of counterfeit money. I have therefore put up the following post:

The fact that this fundamental principle of pre-Keynesian economic theory is named “Say’s” Law has been one of the more damaging aspects of both the history of economics and of economic theory itself. Here is something to contemplate about the true origins of the Keynesian Revolution. The term “Say’s Law” was invented by Fred Manville Taylor and entered into common usage on the American side of the Atlantic in the 1920’s with the publication of Taylor’s Principles of Economics. How, it may be asked, did the term get into The General Theory? Say himself never understood Say’s Law properly. If you do want to understand it properly you need to go to John Stuart Mill and those among the classical school who followed after. J.E. Cairnes is the most accessible source.

Say’s Law states that you can never make an economy grow from the demand side. Mill’s version is a direct refutation of Keynesian economics: “demand for commodities is not demand for labour”. Mill and the classics said you could not make an economy grow by increased expenditure; Keynes said you could. All modern macro continues to argue that it can be done and is to that extent entirely Keynesian. That there is no real world evidence that increases in aggregate demand lead to increases in output and employment confirms in every instance a stimulus has been applied that Say’s Law is valid. If you would like to see my explanation in short form, you have my articles at the Liberty Fund to go to. If you would like to see the longer and more extended version, you could try the second edition of my Free Market Economics. I will just leave you with Ricardo’s reply to Malthus in the midst of the general glut debate (the first attempt to introduce “Keynesian” economics during the 1820s): “men err in their productions, there is no deficiency of demand”. This is the classical and Austrian theory of recession. There has been a disorganisation of markets that has led to recession and unemployment (that is, men have erred in their productions). The problem is not over-saving and a lack of aggregate demand.

Will anyone get it? It is such a frustration.

Say’s Law and Austrian economics

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Peter Boettke at Coordination Problem links to the Liberty Fund discussion on the economics of John Stuart Mill under the heading, Mill > Keynes, so says Steven Kates. Very pleasing, but more pleasing are the two comments, very critical of what I wrote, that have been sent in by Barkley Rosser.

Kates is obsessed with Say’s Law, how it is true basically by definition. Mill’s view of macroeconomics is very sophisticated indeed, and Keynes notoriously undervalued the knowledge of his predecessors. But one very big difference is indeed over Say’s Law, which Mill accepted and Keynes did not. Given Kates’s strong views on this, of course he says Mill > Keynes, but, in fact, Say’s Law is not true in general, and Say himself knew it, as Kates has had pointed out to him on numerous occasions, but…
Posted by: Barkley Rosser | July 16, 2015 at 04:45 PM

BTW, now that it seems I can post here again after a long period of not being able to, let me add that I do not see anything particularly Austrian about Say’s Law. I just scanned a few books by Hayek and von Mises I have here in my office, and there was not a single mention of Say’s Law in any of them. I did find a mention of Say in Mises’s Socialism, but about whether or not Ricardo was right about gross versus net product. No Say’s Law.

I would suggest you all should not get yourselves too worked up about hanging your hats on Kates’s obsession, which he shares with the even more fanatical James Ahiakpor, whom those who follow HET know of. What is in it for you guys other than another way to bash Keynes?
Posted by: Barkley Rosser | July 16, 2015 at 04:53 PM

It’s as if criticising Keynes is some kind of thing in itself, and not one of the paramount economic issues of our time. Or that Say’s Law is not absolutely embedded in Austrian theory even if seldom mentioned. This is what I have replied:

It pleases me to see that Barkley Rosser has opened a second front on the issue of Say’s Law. And let me begin by noting where we agree, which is the absence of much discussion on Say’s Law among Austrian economists. But while there is not a lot, there is some, the most important one unfortunately going all the way back to 1950, in an article by Ludwig von Mises in The Freeman, “Lord Keynes and Say’s Law”. You can read the whole lot at this link but I will quote you the most relevant passage:

“The exuberant epithets which these admirers have bestowed upon his work cannot obscure the fact that Keynes did not refute Say’s Law. He rejected it emotionally, but he did not advance a single tenable argument to invalidate its rationale.

“Neither did Keynes try to refute by discursive reasoning the teachings of modern economics. He chose to ignore them, that was all. He never found any word of serious criticism against the theorem that increasing the quantity of money cannot effect anything else than, on the one hand, to favor some groups at the expense of other groups, and, on the other hand, to foster capital malinvestment and capital decumulation. He was at a complete loss when it came to advancing any sound argument to demolish the monetary theory of the trade cycle. All he did was to revive the self-contradictory dogmas of the various sects of inflationism. He did not add anything to the empty presumptions of his predecessors, from the old Birmingham School of Little Shilling Men down to Silvio Gesell. He merely translated their sophisms—a hundred times refuted—into the questionable language of mathematical economics. He passed over in silence all the objections which such men as Jevons, Walras and Wicksell—to name only a few—opposed to the effusions of the inflationists. . . .

“In fact, inflationism is the oldest of all fallacies. It was very popular long before the days of Smith, Say and Ricardo, against whose teachings the Keynesians cannot advance any other objection than that they are old.”

Say’s Law is at the heart of Austrian theory without most Austrians being fully aware of it. I have spent a good deal of effort trying to get Austrians more interested in Say’s Law as a means to explain the fallacies of Keynesian economics. I will merely here provide a link to my “Ludwig von Mises Lecture” of 2010, where I tried to show just how important Say’s Law is if classical economic theory – of which Austrian economics is the only modern manifestation – is ever again to become central to our understanding of the way in which an economy works. Just let me apologise in advance for the way in which I pronounce Mises’s name; at the time I had read much of what Mises had written, but by the nature of things, had never actually heard his name said by anyone else. It’s one of the problems being a lonely scholar way off on the other side of the globe. But as you will see, there is no denying my extremely high regard for both Mises and Hayek which I discuss early on.

A slow day in a little Greek Village

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This was an old story sent to me by a friend, in this case associated with the problems in Greece.

​How the Greek economy works​

It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village. He stops at the local hotel and lays a €100 note on the desk. He tells the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the taverna.

The tavern owner slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit.

The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything.

However, the whole village is now out of debt and looking to the future with a lot more optimism.

And THAT is how the bailout package works.

I know it’s only a joke, but the penultimate sentence makes me wonder about the intent: “the whole village is now out of debt and looking to the future with a lot more optimism”. They are certainly happier having had their debts wiped out, but…. This is what I wrote back:

It’s a great story, which explains why the real economy and the money economy are so dangerously but inevitably linked. Although the debts are cleared, it is also obvious that none of the money originally borrowed has been able to earn the incomes that would allow those debts to be repaid. The existence of the debt should force each of them to change their behaviour and become more productive. The wiping out of the debt leaves them in their poverty and with their bad habits. An interesting story, but I take a different conclusion from what the person who constructed it might have thought.

Debt is a terrible taskmaster. To borrow more than your future incomes stream will allow you to repay is a disaster that will eat your life away. Same for countries as it is for people. “Neither a lender nor a borrower be” is Polonius’s sage advice.

Krugman v Moore discussed by Moore

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I did a live blog of the debate between Paul Krugman and Steve Moore at Freedomfest on July 10, and now there is a first person account from Steve Moore himself. Here are the bits on Keynes and the stimulus:

Last week I debated New York Times columnist and Nobel-prize-winning economist Paul Krugman in front of 2,000 people at FreedomFest in Las Vegas. It was billed as the economic showdown of the year, and the major theme was socialism vs. capitalism.

Given the financial turmoil in Greece, Puerto Rico, Argentina and most of the eurozone, it would be hard to think of a worse time for Krugman to be defending big government. . . .

The first issue we squared off on was “stimulus.” My point was that Obamanomics gave America the weakest recovery in at least three generations and is running $2.5 trillion in GDP and 8 million jobs behind the Reagan recovery.

Krugman’s response was that the 2008 financial crisis was so catastrophic that 2% growth was the best we could expect. Except that even the Obama administration admits that the recovery turned out weaker with the stimulus than we would have seen without it.

During the debate Krugman called John Maynard Keynes one of the two greatest economists of all time. But when Keynesian economics was put to the test by Obama, it crashed. . . .

My big takeaway from the debate is that advocates of free-market capitalism need to aggressively call out the Krugman-Obama-New York Times-Hillary Clinton-IMF crowd for bringing misery and decline to so many places around the world with their wildly irresponsible debt and spending policies. They’re on the run because their model is imploding right before our very eyes here in the U.S. and around the world.

Perhaps worst of all, their obsession with income inequality and spreading the wealth is only making the poor poorer, and driving the middle class downward, as even Clinton herself acknowledged this week. Krugman and his followers are on the losing side of history. No wonder he didn’t want this debate televised.

I also think that Keynesian economics is under pressure because of the disastrous outcomes everywhere the stimulus was tried. But I hardly think we have seen anything like the knockout blow that is needed. Lots of people still defend Keynes and the stimulus. In fact, next month I will be in a debate in Melbourne on the stimulus versus “austerity” where the other side will be taken by the Chief Economist of one of our major banks (as part of the Policy in the Pub series run by the Economic Society of Victoria – details to follow). Whatever may be Steve Moore’s impression, my own judgement is that Keynesian economics has ended up more entrenched than ever, as bizarre as that may seem. However, do read the comments thread that comes with Steve’s article since there are plenty of people who understand perfectly well how rotten to the heart Keynesian theory is.

[My thanks to Allan in San Francisco for sending this along – I, however, am happily now back home.]

Go on, make sense of this

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Obama has been perfectly consistent in his policy and the American media and the left in general have been perfectly consistent in their ignorance. Since Iran will lie, and Obama was perfectly aware that Iran has lied, how does one interpret any of this?

AMERICA TAKES IRAN’S SIDE…
OBAMA WARNS CONGRESS: HANDS OFF NUKE DEAL…
Deep skepticism…
FEARS OF NEW ARMS RACE…
How Iran Will Use Technology To Cheat…
NETANYAHU: ‘Historic Mistake for World’…
ISRAEL ‘NOT BOUND’, WILL DEFEND ITSELF…
ROUHANI: ‘God has accepted nation’s prayers’…
Centrifuges Continue to Spin…
MAG: Dems lie about inspections…
No breakthrough for Americans held in Tehran…

Brett Stephens said what needs to be said in March, Under Mr. Obama, friends are enemies, denial is wisdom, capitulation is victory. That was what needed to be said. The question now is what should be done?

John Stuart Mill was not a socialist

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The discussion on the economics of John Stuart Mill and its relevance to modern economic management continues on the Liberty Fund website. The latest two contributions, dealing with Mill’s socialism, have been posted by Richard Ebeling and Nicholas Capaldi. The entire thread from start to finish may be accessed here. This is my third contribution which I have just sent off.

Let me make a number of points on Mill’s “socialism”.

First, Mill did not let the cat out of the bag that there were iron laws of production but no similar laws of distribution. Making such a common sense distinction explicit did not invite others to nationalise industries or introduce central planning. Mill is not the father of socialism. He is amongst socialism’s greatest enemies, in spite of what he might have said himself.

By insisting that there were laws of economics, Mill was explaining that there were limits to what could be done by political decree. Economic laws are no different from the law of gravity. They provide a theoretical structure of forged steel that determine what cannot be done, and guidance towards an understanding of how economic policies must be designed if they are to create wealth and prosperity.

Mill’s four propositions on capital provide some of these laws. Economic growth requires increased investment. Increased investment requires increased saving. Employment cannot be increased by increasing aggregate demand. These were constraints against which policy has to be framed.

Mill was writing in the middle of the nineteenth century. He had never actually seen a socialist economy in existence. What is therefore remarkable is that he was as explicit as Mises would one day be, who had seen such things, about the impossibility of running a successful economy from the centre. Instead, Mill wrote, “laissez-faire, in short, should be the general practice: every departure from it, unless required by some great good, is a certain evil.”

Both Richard Ebeling and Nicholas Capaldi have noted Mill’s emphatic opposition to individuals voting for a living. I see Mill’s “socialism” as an early advocacy of the welfare state, in which the rules of the game were designed so that individuals could become productive, and to that end might be assisted by actions taken by government. He left the question of the practicalities of socialism open as a matter of trial and error but cannot, in my view, be implicated as a defender of socialism in any of the forms ever experienced since his time.

This is the crucial point: there are some actions that cannot succeed because they are contradicted by economic laws. Therefore, if they are tried, they will not achieve their aims but will, instead, cause economic conditions to become worse.

Mill is very specific about a number of such economic laws that rule out many of the policies advocated by modern Keynesian macro models. Mill gets these things right, while Keynes, along with much of modern macroeconomic theory, gets them wrong. Indeed, I go further. I argue that not only are Mill’s conclusions right, so too is his reasoning. In my view, you will learn more about how to manage an economy successfully by studying Mill than from any modern-day Paul Samuelson clone.

Trump not surreal at all

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donald-trump-las-vegas-2

You can read my live blog here, and then there’s this news report, Donald Trump just gave an amazingly surreal speech in Las Vegas from which I will quote a bit to see how surreal the attitude of the headline writer is. The story is pretty accurate, and is worth reading through. The Drudge headline for the link is “Trump Rocks the House in Vegas”. It begins:

Donald Trump just gave one of the most bizarrely captivating speeches of his several-weeks-old campaign.

Standing in front of an animated screen in Las Vegas on Saturday, Trump spoke passionately for almost a half an hour, hitting some of his main talking points: President Barack Obama’s weakness, a ‘porous’ southern border, his business successes, and even Benghazi.

It was one of two similarly themed speeches in the day. Later, he spoke before a crowd of what his campaign said was more than 15,000 in Phoenix.

Trump made illegal immigration the primary focus of both speeches, railing against the Mexican government for supposedly sending undocumented immigrants to the US.

Although others like to compare him with Ronald Reagan, the closer comparison for me is with Dwight D. Eisenhower for whom his first elected office was also that of President. I thought it was a very effective speech, and while there are still lots of questions that must hang in the air for a while, there was nothing flaky about how he behaved or what he said. What made him different was that he was willing to take issues head on and not pussyfoot around. Hillary won’t take questions from reporters, all of whom are her friends and supporters. Trump took questions from the floor and answered every single question that the audience was willing to put up, both friendly and hostile. And while there were some vacant areas that he will have to think through more carefully, he made no mistake on the night. You would not want to write him off, at least not yet. For me he was much more impressive than Marco Rubio had been the day before.

UPDATE: Trump’s speech has had wide circulation here in the US. I am now at Stanford for the next couple of days and saw an AP story in the local press, garbled of course, and negative, but still mentioned. This, however, is the take from Breitbart: TRUMP IN VEGAS: SLAMS OBAMA, HILLARY, JEB… CROWD GOES WILD. Some of the flavour:

LAS VEGAS, Nevada – Republican candidate Donald Trump addressed the FreedomFest conference in Las Vegas, telling delegates of his underestimated wealth, his passion for securing America’s border, the slanted portrayal of him in the mainstream media, and how he believes that China and Mexico have “smarter leaders” than the United States.

Some libertarians, who the conference is aimed at, believed that Trump would receive a hostile reception at FreedomFest. But the crowd was generally supportive, or at least open-minded, to Trump’s run. One delegate told Breitbart London, “He doesn’t pretend to be anything. People were surprisingly supportive of him.”

The report captures the essence of the surprise in finding Trump make sense about the issues he dwelt on. But his trying to locate his support within the Tea Party movement, as discussed in the report, may be the largest surprise of all.

Donald Trump live blog

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The media man of the moment here in the US is Donald Trump, no doubt because to them he is an oddball who belongs to the Republican side of politics. They think they have invented someone utterly without mass appeal, an obnoxious billionaire entrepreneur with a negative attitude to racial minorities. He is, nevertheless, the hottest ticket in town. Here is Mark Steyn discussing Trump’s appeal:

What he said may or may not be offensive, but it happens to be true: America has more Mexicans than anybody needs, and then some. It certainly has more unskilled Mexicans than any country needs, including countries whose names begin with “Mex-” and end in “-ico”. And it has far more criminal Mexicans than anybody needs, which is why they make up 71 per cent of the foreign inmates in federal jails. Just to underline that last point, a young American woman was murdered for kicks in a supposed “sanctuary city” on the eve of the holiday weekend by an illegal immigrant from Mexico. He had flouted US immigration law for years – or, to be more precise about it, local, state and federal officials had colluded with him in the flouting of US immigration law, to the point where San Francisco’s sheriff actively demanded the return of this criminal to his “sanctuary city”, thereby facilitating the homicide of an actual citizen, taxpayer and net contributor to American society.

Be all that as it may, Trump has invited himself to Freedomfest and here he is, right there on the stage, the man himself.

Begins.

Donald Trump says he was asked to come and was very happy to. It is an honour to be here at a meeting of conservative and libertarian groups. I happen to like Ron Paul. Played a round of golf. A very nice guy. So many of us believe in the same thing.

Went to see a meeting of parents who had lost their children to illegal immigrants. An amazing thing; hardened reporters were sitting there with tears in their eyes. Others are saying that this is becoming a movement. People don’t know what is happening.

Yesterday in Phoenix. Thousands of people are calling and could not hold in the original venue. An amazing that’s happening.

Many said I wouldn’t run. He wouldn’t want to show his financials and etc, they said. I am actually much richer than people think. I am richer than they say. The reason I bring it up is because my way of thinking is the kind of thinking that we need in this country. Growth with low debt. We need this kind of thinking in this country. We have incompetent leadership. And I might mention that the Tea Party loves me – they are wrongly trivialised.

Our vets are treated like third class citizens. Must take care of our vets. We can provide a better and cheaper healthcare system than Obamacare. Knows a doctor with more accountants working for him than nurses.

Need to make America great again. But you cannot be a country great or otherwise without borders. We have exported our jobs to China. They send a car and we send corn. We think we are not dealing from strength. We aren’t but we can. We cannot get our products into China. They have a surtax on our manufactured exports.

I love China. I love Mexico. I love the Mexican people. But their negotiators are tougher than our negotiators. They send their worst people to the US.

Introduces a black man whose son was killed by an illegal immigrant. Son was walking home from the mall and as he was coming home within two minutes of his house, just shot dead in the street. The man already had three counts against him. You must, according to the Mexican mafia, commit a crime in a black neighbourhood to stay on the wrong side of the law. With Donald Trump we can see hope is coming. The thing is that Mr Trump loves America. “I trust Donald Trump.” He’s the kind of man you want to be your dad. I have a lot of black friends who are willing to vote for Donald Trump.

Trump back. The entire thing is so sad. Once it was found out that an illegal immigrant had killed his son, the story was dropped. It was true in every case. “There is something really bad out there. There is something sick out there.” People can come here. We can have immigrants.

The Mexicans send them to the US. Let the US take care of our problem citizens is the attitude in Mexico.

I talk about trade. Let me talk about NBC. We want to talk about “inclusion”. NBC has a lot of bad people. The Apprentice has been running for 14 years. [He sounds so New York!] NBC didn’t want him to run since they didn’t want to cancel his show which cannot run if he’s running for president.

I’ll make great trade deals. I want to be great on the military. All politicians do is talk. Talk about Benghazi and then nothing. Hillary’s emails, same. Hillary gets rid of her servers and the subpoenas. 48 hours of indignation and then you don’t hear about it any more. If I get the nomination, you will hear about it.

It is hard for conservative libertarian to get decent press. Nobody takes a full quote. “The American dream is dead – but I am going to make it bigger and better.” The media only quotes the first half.

Mexico sends us their problems. The political press is dishonest!!!! We have to deal with them. But I have a megaphone. Still 20% of the people who were there you wouldn’t have thought were there at all from what they said.

If I get the nomination, I will win the Hispanic vote since we will bring back those jobs from overseas. I will create jobs, which includes stopping illegals from coming in to take those jobs.

Went to Wharton. Graduated and made a fortune. Wrote the Art of the Deal. Look at the Iran deal. Persians are great negotiators. We have four prisoners over there. If I were there, I’d say fellows, you have these people. We want them back, and if they said no I’d say goodbye and end the negotiations.

I have a “tapping” – delay while thinking. I know how to negotiate.

Q&A

What I do not encourage people to come into the country illegal.

Q: Federal debt.

A: We owe 18 trillion money. We do all of this business and we owe them money. We are going to be Greece on steroids. A believer in free trade, but you must have good negotiators. I know most of them. I know the good ones. We would have the greatest smartest deals you ever saw.

Q: Bigger problem – persecution of Christians in the middle east

A: If you are from Syria and a Christian you are not permitted into this country. If Islamic you can easily do it. We must do something about it. I’m a Presbyterian. Persecuted people can come in. We should let them sort it out in the middle east and then pick up the leftovers. Trump was supposedly against going in. If you attack Iraq, I said, you will destabilise the balance in the middle east. Spent billions and have nothing. Iraq is meeting with Iran. We are led by stupid people.

Hillary would be the worst president. Hillary was the worst sec of state. Who would you rather have negotiating with China, me or Hillary.

Q: Foreign policy with the focus on Russia?

A: Everybody hates us and they make money from us. With me, the US will make the money and the rest of the world will like us. I would get along very well with Putin. We can make our country great again. I think of myself as a nice person, I am a nice person. But it doesn’t matter if I’m nice. But people are tired of incompetence. Hillary is not going to bring back jobs. Every single person who gave Hillary or Jeb money are lining up to get something back. Me, however, I don’t money. I don’t want anybody’s money.

Wraps up. Thanks everybody. Just angry that the conference was not in the Trump Hotel. And as I always end my speeches: “Make America great again!”

Watching Glenn Beck

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Glenn Beck came to Freedomfest and spoke for an hour, without notes but with a tonne of props. Extraordinarily impressive, he just used a series of artefacts to structure a story about the nature of the American dream. The most interesting part was the story of Washington crossing the Delaware. His back to the wall, only 2000 troops left, he wanted to attack the Hessians on the other side of the river. But these were the best soldiers in the world at the time so it was impossible to think how he could get his men to take them on.

It was then that Thomas Paine wrote about the times that try men’s souls. He described how Paine wrote the text on a drumhead, had it printed and sent to Washington. It was this text that had the men get into those boats and fight the battle that would begin the ascent. And the way Beck began the story was to say that the picture no longer exists because it was bombed into oblivion by the British when bombing Germany in 1945!

The painting, it seems, was by a German admirer of America who hated the left revolutionaries of Europe and painted the painting in homage. The painting had never been housed in America but in Germany. It was painted in admiration of the American way of politics. That same small but important admiration of America in Europe was shared by those in France who commissioned the Statue of Liberty. The assembly of the Statue was itself a different story, since it required the skills of a man who had been railroaded into jail during the Civil War, driven into a self-imposed exile, eventually went to work in Cairo for a French contractor, and when he came back home many years later, because of his experience was uniquely able to understand how to assemble the statue because he knew how to read French industrial drawings.

American exceptionalism remains and the home of the idea of freedom that others to this day wish to share.