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Good evening and welcome to tonight's meeting of the Commonwealth club of California. My name is Joe Epstein. I am a past chair of the Commonwealth Clubs Board of Governors. I am going to be your chair and your moderator for tonight. Programs like todays are made possible by the support of Commonwealth Club members. So if you are not yet a member today is a great time to join. Members do enjoy many benefits which include free attendance at events held at club headquarters on Mondays and Fridays. This is a value of over $500 per year. Information is available in the lobby and the club staff will be happy to answer any questions that you may have following tonight's program. Now let me mention just a few of our upcoming programs. Tomorrow, Friday February the 9th, Neil De Grasse Tyson, Director of New York City's Hayden Planetarium and the man who first suggested that Pluto is not a planet. He will discuss Black Holes: And Other Cosmic Quandaries. That's Mr. Tyson, it's not me. This is going to be a noon program and it will be right here at the Club Office in San Francisco. And then on Tuesday February the 13th, Tom Vilsack, the immediate past governor of Iowa and the first declared Democratic Presidential candidate for 2008 will discuss his views. This will be a noon program and it's also going to be held here at the Club Office. So for more information on all of our upcoming programs pick up a copy of our magazine, its called The Commonwealth. You can find it in the lobby or on the Internet go to commonwealthclub.org, and now on to the program, you are going to find question cards on your seats, please write down any questions that you have for P J O'Rourke and these cards would be collected during the program. Also now is a good time to please make sure that all of your cell phones, pagers or any other electronic devices are turned off. So I am going to pause now just for a moment while everyone makes sure that their cell phones and pagers are off and we will begin this program for our radio audience. Sounds like the orchestra is quiet. Good evening and welcome to tonight's meeting of the Commonwealth Club of California. I am Joe Epstein, a past chair of the Commonwealth Clubs Board of Governors and your Chair and moderator for today. We also welcome our listeners on the radio and invite everyone to visit us on the internet at commonwealthclub.org. And now it is my pleasure to introduce our distinguished guest, author and humorist, P J O'Rourke. PJ O'Rourke confesses that during his student days in the 1970s he was a left leaning hippie. And the later in the decade he underwent a conversion and emerged as a political observer and humorist with definite libertarian and some say conservative views but decidedly anti-leftist view points. Now according to a profile done by 60 Minutes he is the most quoted living man in the Penguin Dictionary of modern humorist quotations. For example he once sarcastically proposed two other American political parties, one to cater to those with his peculiar mixture of views and another for those who would hold the opposite mixture of views, makes perfectly good sense to me to do that. Now PJ has toured the recent fighting in Iraq, he has visited the West Bank disguised as PJ of Arabia and he has traded quips with communist rebels in the jungles of the Philippines. He covers current events with the skill and the discipline of an investigative reporter, but he adds a unique spin that has earned him a reputation as a modern day Will Rogers. He has 12 best selling books which include Parliament of Whores, Give War a Chance, Eat The Rich and the CEO of The Sofa. Both Time Magazine and the Wall Street Journal have called him the funniest writer in America. He has written such diverse publications as Automobile, the Weekly Standard, House and Garden, The New York Times Book Review, Forbes, Rolling Stone and the Atlantic Monthly. Currently PJ O'Rourke is the H L Mencken Research Fellow at the Cato Institute and is a regular correspondent for the Atlantic Monthly, The American Spectator and the Weekly Standard. He is a frequent panelist on NPR's radio game show, "Wait Wait... Don't Tell Me!". Mr. O'Rourke attended Miami (Ohio) University and Johns Hopkins University. P J is known in some circles as a cigar smoking conservative. But in fact he bashes all political persuasions and as he puts it giving money and power to government is like giving whisky and car keys to teenage boys. Please give a very warm welcome to humorist and author P J O'Rourke. Thank you very much. It's a great pleasure to speak at the Commonwealth Club. I have spoken here before and it was a good audience, there were good questions, I and I hope I am a worthy speaker for the organization. This book that I have done On The Wealth Of Nations is part of a series, part of a series at Grove Atlantic Press has been my publisher forever. They were doing called Books That Change The World. There are commentaries on on great books, on the Bible, the Koran, Origin of Species, Das Capital and so forth. We may eventually do another series of books that didn't change the world, Report of the Iraq study group, so on so forth, but that's in the future. The series that we are working on now it's a bit like one of those dummies, you know guides. Except its not for dummies, its for smart people, but the understanding that smart as we may be we are never going to make it all the way through all of these great books or in the case of me through any of these great books, except that somebody paid me to get through this particular great book. You know TV ushered in the age of post literacy and we have gone so far beyond that, I mean, what with the Internet and Google and Wikipedia. I think we have entered the age of post intelligence and I fear that we will live to see the day when a person of learning and cultivation is spoken of as being well blogged. So Books That Changed The World to tell us what we would have read in the great books if we had read them and what we would have thought about what we would have read if we did any thinking. And what was Grove Atlantic thinking when they asked me of all people to write the book on the Wealth of Nations. Well, I guess, I guess what they were thinking was that they were trying to figure out a way to present important ideas to a society that is obsessed with trivialities and they felt that no one could make things as trivial as I can. So I I sit down with this thing and I cracked open to the first of 900 pages. And right away I am faced with a deep philosophical question, an important intellectual puzzle, something I call the quantity query. Why are all these great books always so damn long, you know, I think we have all faced this question usually the night before a big exam when we were in college and one nice thing I have got to say about about getting to my 60th year is that I am no longer embarrassed to ask the question about why these things are so long. I I back in when I was in college, say taking a course on George Elliot, I wouldn't have been able to gin up the nerve to ask my professor why is Middlemarch so damn long. You know, it sure would have been that way to quick and easy, but now I am free to do that. And the Wealth of Nations is very long and as befits a book about economics there is an economic reason for its being long. When it was published in 1776 it sold for one pound, 16 shillings, this at a time when the average wage in Britain was 10 shillings a week. Now your serious minded book buyer demands good weight. I mean, take for instance and lift the Autobiography of Bill Clinton which I feel could have been summed up in a few choice words. So economics made the Wealth of Nations long, but not just the book selling part of economics, economics is it's complicated. We know that if it were simple all of us would be lots richer, you know. But what made Adam Smith a genius was that he was able to simplify economics, he was able to take economics and turn it into a precise scientific discipline as distinct from the unruly jumble of the mental and physical world that we encounter in the actual economy. The problem however was that the minute any of us enter that world of the actual economy, all the mental and physical stuff comes jumbling back down on our heads. For example, if I discover that my five-year-old has walked out of Wal-Mart with an unpaid for my little pony, all of a sudden I am not just dealing with the science of economics, I am also dealing with the science of psychology, the science of sociology with political science in a way and for that matter with mechanical engineering trying to pry her lose from the stupid purple plastic horse you know. And Adam Smith he was just a he was every bit as willing as my crying child and I are too stray from strictly economic points and here is Adam Smith 231 years ahead of himself holding forth on why Angelina Jolie makes a discreditable amount of money. Smith said there are some very agreeable and beautiful talents of which the exercise for the sake of gain is considered as a sort of public prostitution. An exorbitant rewards of players opera singers and opera dancers et cetera are founded upon the rarity and beauty of the talents and the discredit of employing them. So every time you start to feel envious about what Hollywood people get paid just remember that they are public prostitutes. It's that kind of stuff that makes the whole 900 pages of Adam Smith's the Wealth of Nations actually worth reading. Well not perhaps the whole 900 pages there there is for instance a 25,000-word digression concerning the variations of the value of silver during the course of the last four centuries that is like reading modern maturity in Urdu, but a lot of that is very interesting. Another thing that makes the Wealth of Nations long is that that it was very much a product of the enlightenment era and enlightenment thinkers loved to explain things. So it was a kind of a explainomania going on in the 18th century. Now the enlightenment takes its name from what if you think about it is a kind of cartoon moment in intellectual history, you see. You see light bulbs suddenly appeared over the heads of people like Adam Smith except they didn't have light bulbs. But you know what I mean. All these guys suddenly realized that the world is not a divine obscurity, comprehensible only through prayer and Monkish meditation. In other words they realized that not looking at things was not the best way of looking at things. You know that if you illuminated the machinery of nature with a little observation and thought you could see how things work. The universe was explicable and enlightenment thinkers they were going to prime mover damn it, explain. No matter how long it took them you know. Now all explanations start out brief as those of you who are married probably know. But pretty soon Adam Smith he gets tangled up in clarifications, he kind of gets intellectually caught out dagwood style carrying his shoes up the stairs of exegesis at 3:00 am you know expounding his head off while that vexed and crabby spouse, the reader, stands with arms crossed and slipper tapping on the second floor landing of comprehension. For example in book one of wealth Smith is trying, he is trying to explain how we determine price and value and he says if among a nation of hunters it usually cost twice the labor to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer and I am going - wait a minute is killing a beaver really twice as hard as killing a deer? I mean deer can run like hell, you know, we know where the beaver lives. It built the beaver dam we have the beavers home address, you know, and then even if it does take twice as long to kill the beaver waiting around in the beaver ponds smacking at bucky's head with a flat side of the canoe paddle I mean who wants a beaver you know I mean its not like this nation of hunters is wearing a lot of top hats, you know, I mean and after a long day of being a hunter, I mean, you know take your pick juicy venison tenderloin or beaver soup, you know, and yet there is this core of simple clarity to the Wealth of Nations. Smith argues three basic principles and by plain reasoning and plentiful examples very plentiful examples he proves them, I mean, even intellectual should have no trouble understanding Smith's ideas. Economic progress depends upon three individual liberties. Upon the pursuit of self interest the division of labor and the freedom of trade. Now Smith's first insight and really his most brilliant insight was that there is nothing inherently wrong with a person pursuing his or her self interests. Now this doesn't sound like News to us or rather it sounds like everything that's in the news. I mean because these days even altruism has a press agent, you know, I mean it's it's in somebody's self interests to be a celebrity and Bob Geldorf has figured out a way to stay one you know. But it didn't used to be liked that. You see religious leaders philosophers, people in political power used to tell everybody to suck it up. You know, subjugate your ego, bridal your ambitions, sacrifice yourself to God, to society, to the political structure and we bought that and we did because we didn't really have any control over our self interest anyway and if we were slaves or serfs and most of us were, we didn't really even have a self to call our own that we could be self interested in. In the dog house of the ancient and medieval life asceticism made us feel less like dogs. But in Adam Smiths time, by 18th century in Britain ordinary people were beginning to have some control over their own destinies and this did not please a lot of philosophers, it did not please a lot of religious leaders and it certainly didn't please the remainder of the feudal big shoots. And the fact that these people were pleased by the increasing prosperity of ordinary folk infuriated Adam Smith and we think of irony as being a very modern tone but in the 18th century Smith wasn't fully able to use the ironic tone. He said is this improvement in the circumstances of the lower ranks of the people, is this to be regarded as an advantage or as an inconveniency to society. See in the 18th century prosperity for poor people was not yet considered as self evidently good thing why, because nobody had bothered to ask the poor people. And then in lot of parts of the world nobody has bothered to ask them yet and Smith was pointing out that it is never a question of religious sacrilege or philosophical folly or indeed of political treason to better our material circumstances. The question is how do we do it? And the answer is Smith's second insight, division of labor what we would call specialization. Now people before Adam Smith had realized that division of labor was important but they hadn't really realized how central it was to all economic progress. It was Smith who did that. In fact it was Smith who seems to have invented the term division of labor. Like I said it's existed forever. It existed since the time of the caveman. The little wily fellow with the big ideas, he chips the spear points, the courageous oaf spears the mammoth and the artistic type does a lovely cave painting of it all, right. This leads inexorably to trade. One person makes a thing, another person makes another thing and people being people, everybody wants everything. And that was Adam Smiths 3rd brilliant insight was that all trades when freely conducted are mutually beneficial by definition. A person with this got that which he wanted more from a person who wanted this more than that. Now it may have been a stupid trade, viewing a cave painting cannot possibly be worth 300 pounds of mammoth ham, you know. It may have been a lop sided trade, starving cave artist gorges himself for months while a courageous oaf of a new art patron stands scratching his head in the Paleolithic grotto and what about that wily spear point chipper, you know, I mean, he doubtless took his mammoth cut. But these participants in free trade didn't ask us. It's none of our business, unless, of course, we make it our business by introducing trade regulation. And a regulation cannot be effective unless there is coercion to enforce the regulation. So suddenly instead of free trade we have coercive trade and let me define coercive trade. Coercive trade is where I get the spear points and the mammoth meat and the cave painting and the cave and what you get in return is killed, that is a coercive trade. Coercion is very simply the lack of individual liberty; coercion destroys the mutually beneficial nature of trades, which destroys the trading, which destroys the division of labor, which destroys progress. So you can have pursuit of self interest, division of labor and freedom of trade or you can have North Korea. Now Smith's logic in the wealth of nations did a number of interesting things. I mean by proving that productivity could be increased and showing how it could be increased what Smith did was he disproved the idea that bettering the condition of one person necessarily worsens the condition of somebody else. An idea that is still dearly held by Marxists and also by everybody's little brother, you know what's I get, he loses. But wealth is not zero sum, it's probably the central point of Adam Smith is that wealth is not zero sum. If I have too many pizza slices you do not have to eat the dominos box. There is no set amount of wealth, so by showing that there is no set amount of wealth Smith also disproved the idea that a nation has a certain fixed hoard of treasure, a king's ransom if you will of gold and silver and jewels, all locked up in the royal castle vault. No, no said Smith, the wealth of nations has to be measured in the volume of trades and goods and services over some set period of time. In other words it has to be measured by what goes on in the royal castles kitchens and stables rather than what is locked in up in the royal vault. So it was Smith, with this, who invented the concept of gross domestic product, which was a very good thing because without gross domestic product, modern economists would have nothing to say. I mean they would just be standing around mute, in ugly neckties you know waiting for MSNBC to ask them to be silent on the air you know. So if wealth is all ebb and flow then so is its measure of money. Money has no intrinsic value. Now any baby who has eaten a nickel could tell you that, you know and those of us who are old enough to have heard about the Weimar Republic and to have lived through the Carter administration, you know what we are not pained by that information. But but the people in the 18th century were because in the 18th century money was still precious metals. And what Smith had to say about money, this upset his contemporaries because he was saying he was saying that gold is worth, gold is worth its weight in gold. Yeah, sure of course, but not necessarily worth anything else, you know, and people were upset by this. Even though they could look with their own eyes they could see 18th century Spain that was covered in bling and was completely impoverished, so they knew that Smith was right but it was still disturbing to them it was as if Smith having just proved that everybody could have more money had then gone on to prove that money doesn't buy happiness and it doesn't it rents it. So what Smith had to say in the wealth of nations, it disturbed view, it disturbed them at visceral level and it still does, I mean it disturbed me as I was reading the wealth of nations, I am reading along and and I am reading about the pursuit of self interest and but I am thinking Gee, I am not self interested, I am not selfish and greedy, I think about the environment and about others less fortunate than I am. Especially, those unfortunates who don't care about the environment, I think about them all the time, I hope they lose the next election, you know, then we can get some people in office who aren't selfish and greedy, who do care about the environment because if we elect a bunch of environmentalists then that subdivision full of big mansions that's going to block my view of the ocean won't get built. I am not self interested you know. And let's face it. The lower ranks of people do have too much money. I mean look at Britney Spears, or those moneybags buying the chateaus to go on my beachfront, I mean, them with their four-barge garage and the Martha bitchin' Stewart kitchen that they cook in about as often as Martha does the dishes, you know, I mean, they think that they are not the lower ranks because they have got a lot of dough but their life style is an inconveniency to the society, big time, as they will find out when I key their hummer that's taking up 3 parking spots, you know. See these types, all they do is work all day, $8000 a week in some specialized division of labor that none of us understand, on Wall Street or in fancy corporate law firms or in expensive hospital operating rooms, I mean that's no way to live, you know, I mean, and this is why my wife and I, we are planning to grow all our own food, turnips can be stored for a year, and we are going to use only fair traded Internet services with open code programming. We are going to heat the house by means of clean energy renewable resources such as wind power from the draft under the front door and we are going to knit our children's clothes with organic wool from sheep raised under humane farming conditions in our yard. This this will keep the kids warm and cozy if somewhat itchy and it will build their characters because they will be teased on the street, you know. Because okay, yeah sure complete removal of all trade restraints that would be good for the economy but think of the danger and damage to society, you know, we have to have regulations. We have to have regulations because if it weren't for government regulation why big corporations you know, I mean, if it weren't for the kind of regulation that we have got on those big corporations where executives at companies like Enron, World Com, Tyco they could - they could have cheated investors out of millions. I mean without restrictions on the sale of hazardous substances young people might smoke, might drink, they might even use drugs, you know, without strict government licensing of medical practitioners the way would be clear for chiropractors, osteopaths, purveyors of aromatherapy you know. If we didn't have labor unions, 40,000 people would still be waged slaves at the Ford Motor company, their daily lives filled with mindless drudgery. And if they weren't for retail collusion in the petroleum industry filling stations they could charge as little as they like and I would have to drive all over town to find the best price and that would waste gas. So we have to have regulations, you know. And we have to consider the harm to the developing world, you know I mean cheap pop music MP3 downloads from the US, this is going to put every nose flute band in Peru out of business, you know. Plus, some jobs some jobs require protection to ensure that they are performed locally in our own communities such as my job. My job is to make quips and jest and waggish comments and somewhere in Mumbai, there is a younger, funnier person willing to work for a lot less than I do. My job could be outsourced to him. But Mumbai, me I mean he he is thousands of miles away, he could make any joke he wanted without thought of the consequences. He could just let his sense of humor run wild, you know. He could start making Jerry Ford funeral jokes, about how Ford's funeral lasted longer than his administration did, you know and and how it had better economic policy outcomes, you know. But who would my in-laws be offended by, who would my wife scold, who would my friend's shun, you know and then there is the matter of all that Wealth of Nations, ebb and flow of goods and services of Smith's gross domestic product. Now I am as grossly domestic as the next person, where is the product. You know, how come all the goods and services ebb out of my income instead of flowing into it you know. Of course, I understand that that money isn't what's valuable. Love is what's valuable and my bank account is full of love or something similar to it, sex that is I have got a fall in my bank account. You see 231 years after the Wealth of Nations was published it is still very hard for us to believe in what Adam Smith had to say. It is hard for me to believe in it and I am right wing Republican Capitalist pig you know. It is important to understand the Wealth of Nations actually not so much so that we can understand economics. I am not sure that it's possible to understand economics. Well what's important is that we understand the moral lesson that Adam Smith was trying to convey. And that moral lesson is the necessity of freedom and equality. Now the wealth of nation seems to be about economics because freedom and equality are so morally necessary that without them we cannot even perform the humble but morally necessary tasks of feeding, clothing and sheltering those whom we love. The wealth of nations espouses free enterprise not because free enterprise and free markets will make us rich although we hope they will you know. But because free enterprise is based upon property rights and I don't mean Donald Trump property rights. Free enterprise is based on a far more important property right which is the deed that we all have to ourselves our property and our own being, our self possession as free individuals. Adam Smith said the property which every man has in his own labor as it is the original foundation of all other properties so it is the most sacred and Smith said that no matter how poor we are, we all have a fortune. We have an estate, we have an investment portfolio in what he called the strength and the dexterity of our hands. And it is this this the source of free enterprise is this humble grasps of shall we say a hammer and a sickle you know. Smith said that to hinder a person from using strength and dexterity in whatever manner that person thought proper without injury to his neighbor is a violation of the most sacred property. Property that I call me and that you call you. Now this property, this property right that we have, this property right that we have in freedom, this would be meaningless unless we also had equality. Now there was a well known document published the same year as the wealth of nations that said that we hold this truth to be self evident that all men are created equal. But why do we hold that to be self evident because it isn't immediately self-evident. Some people are always going to be taller, bigger, stronger, richer, smarter or so on. You know, it's one of those things, we are all equal because we all showed up, well it doesn't work that way at weddings and funerals you know. Are we all equal because it says so in the U.N. Universal Declaration of Human Rights. Well the U.N. declaration of human rights also says and I quote, "Everyone has the right to rest and leisure including reasonable limitation of working hours", and I will tap my wife tell the baby. No it was Adam Smith writing about mere economics who explained why we are all equal is because man, the most powerful creature ever to bestride the earth is also the most pitifully helpless. We are born incapable of caring for ourselves and we remain so to judge by kids today until we are about 40. I mean, at the age of two when any other mammal in its peak earning years, the human toddler cannot find its ass with both hands you know. At least not well enough to use the potty. The entire creativity of Daniel Defoe was incapable of getting Robinson Crusoe through the work week without a supply of manufactured goods from the shipwreck and the services of a cannibal executive assistant. We must treat other people with respect to the equals not because we are inspired with noble principle or filled with fraternal affection but because we are pathetic and useless. I quote Adam Smith "An individual stands in all times in need of the cooperation and assistance of great multitudes." While his whole life he is scarce sufficient to gain the friendship of a few persons. Now you think about that that's a left wing statement. I mean that is almost a heartfelt plea for socialism and yet that sentence which I just read, is the sentence that comes directly before the single most quoted sentence in the Wealth of Nations. The sentence that reads, "It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner but from the regard to their own self interest" and that second sentence is almost always quoted as though it meant greed is good and that is not the meaning of the Wealth of Nations. Adam Smith does not urge us to selfishly pursue wealth in the free enterprise system. What he urges us to do is to give thanks to the butcher and the brewer and the baker do. The butcher, the brewer and the baker they may be wonderful people or they may be greedy pigs, that's not the point. The point that the wealth of nations is making is that the butcher, the brewer and the baker are endowed by their creator with certain unalienable rights and among those are steak, beer and hoagie rolls. Now that's everything that I know about Adam Smith but we have got a bunch of questions here and so I will make up some other stuff.