Episode 138: The Statrix: How Government Warps Our Perception of the World

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Aaron Powell: Welcome to Free Thoughts from Libertarianism.org and the Cato Institute. I’m Aaron Powell..

Trevor Burrus: And I’m Trevor Burrus. Aaron Powell: And today, we are guestl-ess. Instead—.

Trevor Burrus: Guest-less? Aaron Powell: Guest-less. Trevor Burrus: Guest-less, yes. Aaron Powell: So on today’s episode, what we’re going to do instead is talk with my co-host, Trevor Burrus, a bit because Trevor like many of us is working on a book. And, the book is based on a lecture that he’s given a few times at least. Trevor Burrus: Many times, probably 50 at this point or something like that. In many countries too. Aaron Powell: It’s a good lecture. And so, we’re going to talk about that. We’re going to talk about the subject of the lecture..

The upcoming book, which he calls the statrix. Trevor Burrus: Yeah..

I always got to come up with a name for something and then you can own it. Aaron Powell: So your lecture begins as so many do with griping about your experience on the Metro, the public transportation system here in Washington D.C. Trevor Burrus: Yeah, it’s actually how I came up with the lecture because when I was a poor intern and a big part of the lecture is how this thing I called the statrix affects poor people..

But when I was a poor intern, I was waiting for the Metro one Sunday morning and I didn’t have enough money really to actually take a cab..

In that morning, the Metro was what’s called single tracking..

That’s a dreaded thing that happens in D.C. And I’m sitting there at what should have been a 20-minute trip turned into a 3-hour trip which happens a lot if you take the Metro on the weekends in Washington D.C. And as I was sitting there saying how great it is that the government designed this thing for me as a poor person implemented with taxation and then reorganize the world around this thing and crowded out other alternatives to compete against it..

And then after they did that, they include to make sure it doesn’t go away and then after you’re stuck in the thing, they fail to run it adequately. And on top of that, they start prohibiting things like Uber or trying to prohibit Uber or prohibiting things like Jitney cab services that could help people get out of the system that has been created around them. And I realized that right there, those were like the 7 steps of the government ruining your life..

So, an alternate title of this could be the process of government, but that’s a pretty boring one..

And interestingly now that the D.C. Metro is—.

Aaron Powell: On fire. Trevor Burrus: --on fire. Yeah, I mean just go to isthemtroonfire.com and it can tell you whether or not it is. And we’re going through some crazy track work over the next year for people who are in D.C. who already know. I’m sure this is going to happen and I ended up being a profit because I had said many times that this Metro is going to crash and burn..

I thought it was going to have a huge crash but what created the problem is because the D.C..

Metro which underscores my point— Aaron Powell: Well, it did have a huge crash. Aaron Powell: A month after I started at Cato, trains collided and killed. Trevor Burrus: Yeah, it killed a couple of people and hurt a bunch. But I was expecting something even bigger that would make people shut it down because it is built with two tracks, so the largest Metro is for 5 million or whatever people and D.C. area has two tracks that run and so that means—and the thing about Metros is as soon as you build one they start falling apart because of water tables and pressures from the earth, so you have to run constant maintenance..

And so when they run maintenance of the D.C. Metro, they have to do it like you do maintenance on a street work that holds a stop sign. The whole line of cars backs up and let us through..

That’s what single tracking is. And because that’s so disruptive, they’ve actually not done maintenance at the level that they should have for a very long time which goes to point step 6 of the process, which is inadequacy..

Aaron Powell: Okay..

Well, let me just—before we go through these steps, probably government ruined your life. The Metro seems like an interesting example to use because your argument broadly is that government takes over something or offers a solution and then excludes other solutions and then the government solution gets worse and worse for a whole bunch of reasons and it continues to prop itself up and forces to use it and bad things happen. But, the Metro is potentially not an example of that because this seems like the kind of thing that’s on its face—is something maybe only the government could do. Because, year, I mean Uber can put cars on the streets, but cars are not the same thing as subway trains that required digging enormous tunnels under a major city which is probably not something that—I mean I know that startup founders are pretty keen on their own abilities, but bootstrapping a major subway system is probably out of the reach of most small companies and even big ones so we would potentially need the government and it’s not immediately clear how you would compete with Metro because you can’t dig even if the government allowed it, again it would be a problem to try to dig competing tunnels and so on and so forth. So, is it really the kind of thing that we can talk about easily within this framework in the first place?.

Trevor Burrus: Yeah, it is absolutely the kind of thing because in order to do a proper critique and understanding of the nature of government and of the alternative that we’re trying to propose as a freer system, you have to be able to have a deep understanding of how the government, whatever program it is, not every program, but so many of the programs change how the world looks in a fundamental way..

Now, first of all—so, first of all, if you’re saying what has the Metro needed—this comes up in New York, for example, which is the closest Metro to break even because the Metro is heavily subsidized here too so people are paying the full price for it. And actually trying to come up with what other costs of having this Metro, well, some of it is sprawl and things like this. People have reorganized their life around the Metro..

So if someone asks the question—and this sort of just highlights my basic point when we get into things that are not transportation things..

But someone says, “Well, if the New York subway didn’t exist, how would people from South Brooklyn get to Manhattan to work?” And the answer to that question is, “New York City would look fundamentally different than it does now,” and there are many ways that people decide where to live based on the availability of transportation options. What’s actually competing against the Metro are Ubers and Jitney cabs and other things that could exist that the human imagination can come up with or people just not actually living someplace because there’s nowhere to get into downtown or having two different city centers where there could be different commuters going as opposed to one different city center..

In Denver, they have the tech center which is south before they put in their Light Rail System..

So you have to look at it at a much more complex way to figure out how this government thumb on the scale—that’s the way I describe it..

Some of it is just a thumb on the scale. Some of it is a massive transportation project. How it has changed how the world looks and that’s why I call this thing the statrix. Aaron Powell: Does this statrix a ref on the matrix—.

Trevor Burrus: Yes..

Aaron Powell: --or on dominatrix? Trevor Burrus: I like that second one. We can come up with some sort of—No. It’s a ref on the matrix. It’s a combination of the state and matrix and that’s sort of what I try to do with these 7 steps which is to give the blue pill or the red pill, sorry—it’s the red pill that gets you out of the matrix, right? When he offers the two pills to Neo. And trying to get people to see how the government has created a world around you that it’s almost a virtual reality world. And so my hope is after you read my book or listen to this podcast or hear me speak, that you have a better—you’re more like Neo at the end of the Matrix where he can suddenly see the code around him. All those times, we’re like “Why is this this way?”.

There’s so many things in the world that we just accept as being normal but they are fundamentally not normal. They are a virtual reality experiment that we live in that I call the statrix. Aaron Powell: So, what’s step 1? Trevor Burrus: So, step 1 is just the basic conceptual step..

And I said this is a rubric to put many things into the Metro is a particularly useful one. But the question is what is the thing being built for?.

Because the big part of this is the people who are most trapped in the statrix are poor people generally speaking. And so many of these things that are conceptualized as help to the poor end up being things that the poor people are actually trapped in. It’s rich people who can get out of these things, which is why the kind of social justice, the egalitarianism that’s part of libertarianism I think rightly conceived needs to make this critique especially about poor people. It’s the poor people who can’t get out of these systems..

So, when you think of something like Medicare or Medicaid or you think of something like a subsidized Metro system with things like this, they’re generally proposed to help People of lesser means are often proposed in these situations and even things like ObamaCare in public school systems. They are proposed to help people of lower means..

Now, like I said when I came up with this idea, I was a poor intern at the Cato Institute and what trapped me in the Metro and had to deal with the 3-hour wait as opposed to walking outside and at that point, Uber was just coming online..

But what trapped me there was my poverty and as an aside, we haven’t mentioned this yet, but one of the things that came to me when I was coming up with this idea is that there is a great song by The Kingston Trio that some of you might know called M.T.A. which is a covering of an old campaign song about—from a Boston mayoral campaign where one of the proposals of one of the candidates was to raise the price of getting off the Metro 5 cents..

And so one of the candidates who opposed this guy had the song written that postulated a guy who couldn’t afford the 5 cents to get off of the Boston Metro and so he stuck on it for the rest of his life. I suggest looking it up. But that guy who can afford to pay 5 cents to get off the Metro is the—in the song is Charlie..

He’s stuck on the M.T.A. and poor people are stuck on these things that are conceptualized usually for them in some way. Aaron Powell: Is stuck the right way to talk about it though?.

Because the impetus behind these things—behind, say, Medicare or public transportation if we’re framing it around helping the poor is that the poor not being provided with a service right now and—or the services that are out there are too expensive for them to afford so healthcare is too expensive or transportation is too expensive..

So what we’re going to do is provide them with a cheaper alternative, and so now that cheaper alternative may not be great. Medicare is not great. The Metro is not great. But to say that they’re then stuck in it doesn’t seem quite right because it’s not like they had all these alternatives and then we shove them into this one. But rather, they couldn’t get the better alternatives..

They still can’t get the better alternatives, but at least they now have a non-zero one they have access to..

Trevor Burrus: Well, it depends on where you’re starting—where you’re thinking about your starting point is..

First of all when you talk about things like access to medical care and things like this when it came to pre-Medicare or pre-Medicaid, there was systems for that to happen and there are ways that you could have proposed regulatory changes that would have made it better and easier for flourishing market to exist for poor people to have access to these things. Now again in terms of the Metro—sometimes the point of it is to create a new system around—like to actually redesign the city when they do city planning and all these things and give them access. Now, they maybe weren’t getting into the middle of the city before they are working on the outside of the city and that’s one choice that they made and now they’re giving them an option to get in the city. But again, the point is this doesn’t always mean that the critique of some of these things means that they’re bad. This is a deep way of understanding how the world has reorganized in such a way because the trapped element of it comes in on the later steps because it becomes the only option. And when it becomes the only option for these poor people, then I would say that they’re trapped especially when that thing starts to run down because of the nature of government programs to become worse and more expensive over time and then I think the right term is trapped..

But the most important part of this is that it’s eliminating the statrix things whether it’s ObamaCare, Medicare, Medicaid, Metro, public schools or anything else we can name. What they do is they eliminate other possibilities. And the most horrible part about the statrix and the reason I use this sort of matrix word is that when it looks like Medicare is the only thing around and it is the only thing around because it crowded other possibilities, we think that the world before Medicare was just the world as it is now but without Medicare, but that’s not the case. And the worst thing that we lose when the statrix is in full operation is imagination. We lose the ability to imagine how things could alternately be or have entrepreneurs out there trying to make ways to get access for poor people to have medical care because you can’t compete against the government, but that gets into the further steps. So after—we’ve covered the concept of how to improve the lives of a given set of Americans and then we move on to implementing And the most important thing about implementation is that it’s done through taxation. Now aside from whether or not taxation is theft or whatever, it’s a coercive non-voluntary payment..

One thing we know about governments is that they basically can build anything. I mean with some democratic checks but they can build anything with coercive non-voluntary payments..

So this is a basic rule we use when we think about free markets..

If it’s a voluntary transaction that something exists is a demonstration at least initially that people wanted..

So this is true of even things like Nickelback. I mean the very existence of Nickelback or the New York Jets and they are existing. Aaron Powell: Well, the continued existence because—.

Trevor Burrus: The continued existence, yes. So the initial—.

Aaron Powell: --because things try to exist and some people don’t want them and then they go away..

Trevor Burrus: But Nickelback is—you know, made the same album for whatever, 1500 years, however long they’ve been around. But since they’re not a state-sponsored band, I presume that there are Nickelback fans out there..

I presume that there are people who shop at Edible Arrangements..

I’ve never shopped at Edible Arrangements. I have no idea who shops there. But because it exists, I presume it’s done through voluntary transactions. Now, with the government using taxation, this is important for the step on the statrix level is that—again, going back to transportation questions..

You could put—so right now, they’re putting this high speed rail line in California and it’s supposed to go from Los Angeles to San Francisco and it doesn’t actually really go from Los Angeles..

It doesn’t really go to San Francisco. It’s way outside Los Angeles. It’s way outside San Francisco, but nevertheless, they’ve put this thing in. And it doesn’t matter that people may not want to pay the full price of what it would actually cost to have it because they’re going to have to subsidize the ticket. They can put this in. They can put up—if they wanted to put a high-speed rail line from Minot, North Dakota to Pueblo, Colorado, that could exist even though no one actually wants to go from Minot, North Dakota to Pueblo, Colorado. They could put that in with taxation. But to put it on a more—on a different sense, imagine here in D.C., they put a Metro line from here to, say, Lancaster, Pennsylvania. No one really wants to commute from Lancaster, Pennsylvania to D.C. at the cost that it would actually—with a nonsubsidized cost. But if they put that in there and they can do it with taxation and then you get steps—you would get steps 3 through 7 after that if you just created an artificial community in Lancaster, Pennsylvania that people aren’t paying the actual price of because taxation is being used to implement it. Aaron Powell: When you say they don’t want it, do you mean they don’t want it now? Or they wouldn’t want it in retrospect? Because you can say like—so a lot of, say, our major urban centers exist because some piece of infrastructure was there like, say, a port..

You know, so— people didn’t say, “Hey, I want the city of Baltimore.” There was a port and then it grew up around So maybe, you know—of course, we don’t want—there’s not a lot of people clamoring for a transportation or would pay the full cost right now for transportation system between this city or that city, but maybe that’s because we as consumers have a lack of imagination and so you need a planner—policy analyst, a congressman, a lobbyist to step in and say “I have a vision and if you can—you the state can coercively fund this thing, you’re all going to thank me later when we have these major hubs and we’ve built up commerce and there’s all these thriving vibrancy that wasn’t there before. Trevor Burrus: That’s a really great question. And again, like I said, the observation that something is a statrix piece is not a complete condemnation of it..

It’s a way of analyzing it. It could be possible for city planners to predict the next place people want to go, but like they also wouldn’t necessarily be predicting..

They’d also be influencing that. And, if you listen to our episode with Randal O’Toole, they usually don’t do a very good job of predicting this stuff or they impose a vision on the city with, you know, 50-year city plans that end up being a perfect example of the statrix if they actually try to implement it and I did want to see and I think I said this on the Randal O’Toole episode..

I did want to see in Denver the city plan that was written in 1952 for Denver in 2020, which is amazingly—an amazing conceit to think that, you know, without even being able to predict the technology of the future or like what people would want or anything you could actually plan a city for that long in advance..

Aaron Powell: Right..

I think we need to be careful to not—we often say like markets. We hear people say like markets give you what you want, you know, and then government is giving you these things that you wouldn’t want or don’t want. But, of course, you know, one of the critiques of markets that you hear from our friends on the left is that it makes us want things that we don’t really want like consumerism is about this kind of false consumer consciousness when in fact that’s a benefit of markets is—you know, we didn’t—“I had no idea I wanted this thing and someone came along and created it and told me I wanted it and it turned out, yeah, that I know about it, I actually did.”.

But if you had polled me like if we ran markets by having consumers check off or fill in the blanks on like which products would you like to see over the course of the next year, our markets would look very different and much more impoverished than they do right now. Trevor Burrus: Well, that’s a really—that’s a great point..

Aaron Powell: And so we want to be sure that we’re not—.

Trevor Burrus: Saying the government can’t do a similar thing..

That’s a really great point. And that would get to a point that we’ll talk about on my 8th step or it’s not totally a step of the statrix but the circumvention point which is what entrepreneurs are supposed to be doing like the value of entrepreneurs in a market situation where they have the ability to fail..

It’s the ability to fail that keeps markets from generally creating the statrix kind of situation aside from monopoly. We won’t get into that. But like that ability to fail—it’s the inability to fail that makes the government very different in this way or at least easily fail..

So, yes, government—any libertarian who says, you know, governments can’t provide things that are either good or people want is overselling the point. They absolutely can..

The question is whether they usually do whether they can do in comparison. And also, remember that one of the most uninteresting things that can ever be said about government is that they give you something that you like. It’s a very important—I mean I was talking with a guy the other day about bike share, which has become a big thing here in D.C. And his main argument for why it’s a good idea is that he really likes it and I said—just like, “Okay, so the government takes taxes, put a bunch of bikes on the street and you like it.”.

This is not a theory of government. This is a theory of stuff for you. So, yes, if someone gets a commuter or Metro line from Lancaster, they may like it especially if they don’t have to pay the full price which they assuredly wouldn’t. The question is whether or not that’s something government should be doing. Aaron Powell: So we come up with a concept, then we implement it with taxes and then this is when we start seeing I think the metaphor come into being which is when we start reorganizing around it..

And that’s when you start building the statrix. So I already mentioned what would happen if you build a Lancaster commuter line and again, you got to have the deep critique. If we did put a commuter line from D.C. to Lancaster, Pennsylvania and it was subsidized. It becomes a commuter community there and then if 50 years later we say, “Why are people—we need to take that away.” And then someone says “If we take that away, then how are people going to get from Lancaster to D.C.?”.

It’s like, well, you created this problem and you reorganized the world around it by doing this..

And so, it clearly happens in transportation situations..

It happens in the transportation hubs and large physically immobile stations reorganize cities constantly and, in fact, Megan McArdle wrote a piece a while back about the D.C. streetcar which is a huge boondoggle that people are now saying “Just scrap it. It’s never going to work.” It goes up and down this H Street corridor and it’s overrunning costs and it’s overrunning time..

I’m not even sure it is working now or—do you know?.

Anyway—.

Aaron Powell: I don’t know. I don’t ever go to 8th Street because I don’t go to bars..

And so, if you live in D.C., it’s interesting to see that if you take a lane of traffic—and my brother and I was just in Sydney, Australia and he says they’re doing this in Sydney too..

You take a lane of traffic and you take it out by putting tracks in it and so you make the traffic worse on the street to put this, you know, nice fancy new thing in place back and forth and that thing is now immobile like it has to run that course and have these stops that are going to be those stops whereas the most efficient thing that you can run is a basic public transportation thing and it has less statrix effects as just a city bus system because it doesn’t have to destroy a lane of traffic..

It’s actually—you can move it to the people as opposed to having the people move to the transportation hub..

And Megan McArdle said, “Well, maybe one of the reasons that politicians will like these large expensive immovable transportation projects is because it gives them a better opportunity for graft basically. Like if there’s a stop of a large physically immovable transportation system, then every property value around that is going to go up and they can say that’s never going to go away with all these businesses that are going to be held by this where you say we might change a bus line and move it somewhere else..

But that’s—again, that’s part of other reorganizational works. People move there..

Businesses move around those things and after that people forget what the city used to look like and they think that’s what the city naturally looks like and that’s where you have the reorganization. But, of course, it’s not just transportation. It’s a really good example of the statrix. If you’re American, this is—if you listen to Free Thoughts a lot, you probably know the answer to this question, but why do we get insurance through our jobs? This is a basic question. And it’s so normal here that you probably haven’t thought how just not normal that is..

It makes no sense that you would have insurance through your jobs..

It wouldn’t be so— Aaron Powell: So we get health insurance? We’re all quite used to getting all sorts of kinds of insurance without our jobs, but we don’t get auto insurance or homeowner’s insurance..

So I meant—yeah, I mean health insurance. So, it makes little to no sense why that’d be the case..

And if you’re, you know, a cynical enough libertarian who’ve been doing this for a long time, you see something like that that doesn’t make sense where you finally realize it doesn’t make sense. You probably maybe had never thought that it doesn’t make sense, which is again, the statrix part..

And then you say, “Well, what happened?” And the answer to that question of why we get insurance from our jobs generally has to do with the tax break that went into the tax code in the early 1950s after the post-war. In the post-war world, there were some wage ceilings for people coming back. So, they said you’re not allowed to give people, say, more than 10,000—I can’t remember what the tax ceiling was with like more than $10,000 in take home wages. And so when you put a wage ceiling in, people who are worth more than $10,000 are going to get paid in a different way. So, some companies started paying them with benefits, health benefits. And so those benefits were themselves not taxed and not part of that wage ceiling. And then the early ‘50s Congress put that into the tax code and now that means that you can decline your health insurance through your job and take your tax wages and then go buy health insurance on the market, but that sort of a silly thing to do because the benefits themselves are not taxed according to tax credit..

That’s a small thumb on the scale 60 years ago, but you run that game forward— So, first of all, the insurance companies reorganized around this tax plan. They reorganize their business plans around selling to large employers more than having a competitive individual buying market. So that’s part of the reorganization. And then everyone started falling at a statrix and they think that this is normal and then we get to the “crisis of the uninsured” when ObamaCare was first being discussed in 2009, which is really just a crisis of the unemployed or the underemployed insofar as it was a crisis and of course the obvious answer to that was to look back in time and trying to figure out whether reorganization took place, but that’s not something that policymakers generally do, so they redefine and doubled down the whole thing with this idiot law called ObamaCare, but that’s another type of reorganization. Aaron Powell: As you say this though, the question that comes to mind is any change in our environment is going to cause reorganization. So no matter what government does or what a market actor does or what individuals do, it’s going to change the environment and then the rest of us are going to adapt to that in some way..

And then that adaptation especially if it’s larger scale or longer term is going to become sticky such that we could always say, “Look—” yes, we can go back and say that, you know, this was the thing that caused it, but that doesn’t change the fact that then dumping that influence on the market will be often painful or require abrupt re-adaptation. So, are you describing something that is unique to the way the state operates versus just—the state is relatively big and so— Trevor Burrus: Big things. Aaron Powell: Big things have bigger effects, but—you know, so did the—most of us have reorganized our way—our lives in often positive but often negative ways around the introduction of the smartphone and is that—Are we existing in a smartphone statrix as well? Trevor Burrus: So it is—again, remember step 2 is implementation. It is the unique ability of the state to do its reorganization in the way it can do it without voluntary transactions. You could do it via entire voluntary transactions. So I’m going to put up a shopping mall. Those usually involve some sort of tax credits But just put a shopping mall, then, yes, that also reorganizes stuff, but the preference here is for voluntary interaction and interaction that prefers voluntary interaction, interaction that meets the needs of people as they perceive with the time and then things that can go away easily if they fail. I mean that’s one of the biggest things that commends the market over government as its ability to fail effectively and then to deal with those problems quickly as opposed to having them persist. And the funny thing is that, yes, the government is big so it has bigger reorganization effects but the story I told about health insurance through your jobs, that is a very small effect based in step 2 the implementation through the tax code..

It’s just a little adjustment of that, of their ability to how much they’re going to take from your wages or not can reorganize the world at a drastic way. So it still is that unique taxing ability that makes their reorganization different, but that’s an excellent question. Aaron Powell: And so then they move on—we’ve reorganized, but that reorganization doesn’t just change the way that we interact with this particular thing but it changes the way we interact or can’t interact with other things be it crowding out. Trevor Burrus: Yes, step 4 is crowding out. So, the story so far, they come up with something to help generally poor people. They implemented taxation. The world starts to reorganize around it slowly and then after it’s been more and more reorganized, step 4 is crowding out of other possibilities. Now the best example of this is public schools. But most things in the government—I mean especially if they are for helping poor people, they’re subsidized in some way. Many things—there’s many things the government does, the kind of things we’re talking about here..

Public schools are really good example and this goes back to the point I made at the beginning..

The most important thing about it, you know, that you should take away from what I’m saying here is the imagination point because here we start to get the statrix because first the world looks differently and people forget why the world looks differently, but then other things go away and people think that there are no other options. And the thing that libertarians are really—I think the hardest thing that we have to fight against is a lack of imagination. If you’ve ever had a conversation where you tried to convince maybe a friend of yours that private schools can work and their first answer was “Oh, yeah,” because everyone can just go to those rich private school, Catholic schools like Groton in Massachusetts where FDR went..

And your reaction has to be are you that lacking in imagination that you don’t understand that if public schools either went away or we voucherize it or many other things, tax credits or whatever, the world will look fundamentally different..

There would be people—there are no schools that are competing against low-income kids. There’s no one creating those schools here which is why books like James Tooley’s The Beautiful Tree, which is published by the Cato Institute is really valuable where he talks about how the poorest people in the world are educating their kids privately because you need examples..

And when those examples go away, the statrix infects the brain and you think that, “Oh, well, the world would look the same in the absence of the public school system. Aaron Powell: Is this lack of imagination because non-libertarian groups have quite a bit less of the demographic density of sci-fi nerds at libertarianism desk. Trevor Burrus: It’s funny because I gave a little talk on sci-fi in Australia at this conference I was speaking at, and that’s one point I brought up. I think one thing that sci-fi—one reason for the libertarian sci-fi is so—I mean one of them is you think about other ways of doing things and you’re better at not getting caught up that this is the only way of doing things..

So, yeah, the crowding out is important and, of course, crowding out happens in healthcare. It happens in transportation. No one in D.C.—or really probably no one anywhere..

Don’t call me that. It’s not my expertise, but Randal O’Toole once told me, I think that the New York City Metro comes close as to breaking even but every Metro is subsidized to some degree. The D.C..

Metro is so if you’re paying the full cost, it would be much more expensive than it is. Aaron Powell: Oh, I believe I’ve heard the Metro has—the consumer bears a larger chunk of its overall cost than is typical. Trevor Burrus: I think that’s true because they don’t get as much money from the local government, but—so you’re paying a subsidized rate..

Now competing against a subsidized rate at all on anything is very difficult for someone who wanted to start a voluntary organization to transport people around that doesn’t enjoy the benefit of step 2 taxation. And so, if you wanted to create a Jitney cab company which is sort of a little neighborhood taxi, somewhere between a bus and a van that—we’re talking about those in a few steps too. You have to charge full price to cover your cost and then some profit and competing against the government that doesn’t do that means that those things don’t exist and this is the very slow and subtle way that people start to think that the statrix is real and the only possibility because they say, “Well, where are the private schools?” And like that’s the thing that we have to constantly show them. And the other thing about the crowding out and imagination point, which I’ll come back to a few more times as it’s a very important point, is when we—they always can point to something like the existing public school system..

What we want is that thing to go away so that the statrix effects can be eliminated and then for a thousand flowers that bloom of different types of schools out there, so what does your private school system look like? You say, “Well, like I don’t know. I’m not an educator, like I believe in people and I believe that people want to educate their kids and I believe that they will figure out many different ways that I can’t even conceive of of how to do that and I’m sure it’s probably better than a Prussian model of education system designed in 1890 that hasn’t changed at all.” So it’s hard to point to what a private education system would look like as they get more and more eliminated. And when those things go away entirely, our job as advocate for liberty becomes very difficult to even say, “Look at this schooling system in Nairobi, Kenya” or “Look at this schooling system over here.”.

If the statrix takes over, people will lose the ability to imagine other possibilities almost entirely and it’s very—it will make our job almost impossible. Aaron Powell: I think one of the pernicious effects also of the subsidizing that props up the government systems whether it’s public schools or public transportation or Medicare, Medicaid is that it gives consumers—so it doesn’t just crowd out competitors in the sense that like they can’t make as much money..

They can’t compete on price but then it anchors a certain price in the mind of the consumer as what this thing should cost that is highly misleading. So they say like, you know, these private schools are so—they’re just like education should not cost that much. Education should cost the next-to-nothing-I-pay-out-of-my-pocket-to-send-my-daughter-to-a-public-school like—.

Trevor Burrus: And they should be getting cheaper and better..

Aaron Powell: But what’s hidden there is the actual cost that I’m paying. So it’s not like private schools are actually more expensive than public schools because in many cases they’re not. In fact, you know, you can—we at Cato, we put out studies on the actual like how much per student are we paying for, say, this public school system, how much money is this school spending per student. And you get things like the—the D.C. public schools cost roughly as much per year per student as the tuition you and I paid for the private law school that we attended. Trevor Burrus: About $27,000 a year I think for D.C. which is low. Aaron Powell: Which is substantially more than private school’s cost. Trevor Burrus: Yeah, tuition. Aaron Powell: The same with public transportation, like we get to thinking that it ought to cost $1.25 to get across town and, therefore, when someone wants to charge $8 to get across town, we’re like “No..

Well, that’s just—that’s outside of the reasonable range,” but in fact, we’re paying at least that amount in actual cost or our copays on health insurance that we think these procedures ought to cost the $10 copay and we don’t see the hidden costs. Trevor Burrus: Yeah, that’s a great point. And again if you have the ability to get out of the public schools system—and this is again going back to the Metro thing, me being poor as an intern, the M.T.A. song from The Kingston Trio with Charlie being stuck on But the people who are stuck in the public school system are poor people and they don’t have the—just like Charlie’s 5 cents to get off the Metro, they don’t have, you know, even $500 to get out of the public school system which has now crowded out other possibilities, and of course that’s just one example. Aaron Powell: And because they’re paid for via taxes..

They’re subsidized via taxes. Getting out doesn’t actually mean really getting out..

It just means continuing to pay for while not using..

Trevor Burrus: Yes, exactly. So, this is when it gets very pernicious. It gets mostly onto poor people. So then one of the interesting things that happens which is the next step is that we have—so far we’ve been talking about the state and we’ve been talking about the state does something..

The state pays for something. The state then pushes other market participants out..

But at some point, when these programs or services or goods become entrenched enough, it kind of draws the market actors back in but in not a good way but in an inclusive Inclusion is very subtle, you know, everyone sort of talks about money and politics and all these huge problems with collusion. It’s subtle within that because individual people can have a huge interest in continuation of a government program that maybe shouldn’t exist or shouldn’t have existed in the first place..

So, to return to my hypothetical Metro line to Lancaster, Pennsylvania, like everyone who then purchased a house around there which is now worth a ton more money or probably significant more money because of that line. If they ever came in and said “Let’s remove this line,” those people aren’t going to be voting for not doing that if it’s a voting initiative where they’re going to, you know, actualize their preferences in some other way..

And most people, you know, you could be the biggest libertarian ever and still be like I don’t want to lose half the value of my house that I bought expecting those Metros stop to be here..

And so, this is—you know, one of the stupidest things that Romney said when he was running in 2012 was this 47% concept. A lot of people have pointed out that, you know, when you talk about the direct payments to people in the form of welfare checks, the kind of people that Romney was talking about and this is just so wrong-headed in terms of the kind of people who are actually sucking on the government teeth. So I used this—one example I used is agriculture policy..

If you know anything about U.S. agricultural policy, it was designed by evidently—I always say it was designed after a White House Christmas party on the back of a cocktail napkin about 1935 because it’s that—I mean it’s absolutely insane..

It’s a cartel system that socialized and collectivized in a huge degree, and this means that you have things like the Raisin Administrative Committee which is something that I wrote a couple briefs for in the Supreme Court case and the Supreme Court recently said struck down part of the Raisin Administrative Committee’s powers but let’s go back. There is a Raisin Administrative Committee. I mean this is not brandy and dystopic novel. This thing exists..

There’s also a Spearmint Oil Administrative Committee..

There’s all these other things, but the Raisin Administrative Committee itself was brought into being in 1949 and they have the power to control the price of raisins by taking raisins from farmers. Now at the Supreme Court, the famer who was challenging it had many briefs on his side and there was only one brief on the side of the Raisin Administrative Committee. Would you like to guess who wrote that brief? Aaron Powell: Raisin industry. Sun-Maid Raisins which controls 23 seats I think on the 47-person Raisin Administrative Now, Sun-Maid doesn’t need the government to protect itself..

This is a really good example of how much business is for your competition or just anything that you put in place, they’re going to like, “Well, we need to continue this thing to exist.”.

The Raisin Administrative Committee is something that has to continue to exist because it has existed and it must continue to exist. So this is another type of collusion. If you think about it, you could do almost anything..

You could—if you pass a law that said every blue thing had to be launched 25 feet in the air before it’s sold, it’d probably be like a New Deal “make work” law and they’re launching blue things in the air. They’re launching blue cars up in the air and all this stuff, and then selling them and then 40 years later, someone says “Why are we launching blue cars in the air?” And they’re going to go, “My daddy launched blue cars in the air. This industry has been launching blue things in the air for—it’s good enough for my daddy.”.

Aaron Powell: Plus there’s a lot of American boys, we’re going to launch. Trevor Burrus: And if it was unionized, you know, forget about it like—it was like, you know, that’s why the statrix comes in and the collusion is very subtle. And again, you take industries like—alcohol is a really good example too. So we have a 3-tiered monopoly system in alcohol distribution in the United States because of the hangover from prohibition. And again this is the reason why, so most of your big beer and alcohol will kind of support this because it’s what they’ve always known..

And so, there’s wholesalers and retailers, producers and wholesalers and retailers and this is why you have a patchwork like I can’t get Odell’s just mailed to my house because—and there’s a collusion going on there between the liquor industry and this existing stupid system, which is not as stupid as the blue launching system, but it’s not much stupider than that..

I mean it’s not much better than that. It is definitely not much better than the Raisin Administrative Committee. So you have this system with alcohol, and alcohol is a really good example because that’s a statrix thing on a local level and on a national level..

But again, you have to look at this thing like I had said about when you see something weird like why is insurance through my job or you see something like why can’t I not purchase beer from the brewery in Colorado that I really like and have it mailed to my house in Virginia, like why is that not a thing?.

We’ve become very accustomed to, “Well, of course, you can do that.” No, I mean that’s the thing. That’s the—like it should be a thing that you can do and the reason that it is a thing is because of this 3-tier monopoly. And when you get to sort of step A but like you think about it there are people trying to drop burritos from the sky via drones that you call to your place via the phone. Burrito drones, I’d say it’s a real thing. The FAA, of course, made that a problem but there are people trying to come up with this business and I cannot order a beer to my house in Virginia from the brewery in Colorado. So again, that kind of collusion, it’s very subtle..

It happens on the property level. It happens for insurance companies in the healthcare level, pretty much almost anything you can imagine that the government does where there’s a tax break or a property program that creates some sort of people who prefer it and want to keep it in place no matter how silly it is..

Aaron Powell: So your next step, all of these steps were—I have this outline of your talk that you gave me in front of me, and all of the steps have some points and examples listed. Except for this next step which is inadequacy, was that intentional? Trevor Burrus: I mean it just sort of speaks for itself..

But again, you know, remember my story at They put this thing in for me to implement it with taxation..

They’re organizing the world around it. They crowd out other alternatives. They collude to make sure it never goes away and the Metro operators, the union and everything. And then after you’re stuck in it because there are competitive pressures and because the government and because steps 1 through 5,that’s one of the reasons they’re also learning competitive pressures, they fail And then the joke is really on you like especially Mr. Poor Person..

You know, obviously the public schools are probably the best example of this in terms of what’s doing the most damage to our society, but you can take anything from healthcare, you can almost name anyone of them because the tendency of government programs is to become worse over time and more expensive, and it’s very, very, very not funny. I mean you can watch like Veep or something like this, some comedic show where we make fun of government inadequacy, but it’s incredibly not funny especially to the poorest people who need to—who are trying to use something that they put into place that is just simply not doing the job..

Aaron Powell: So, we’ve come up with a plan to fix things..

We’ve implemented it with taxes. We’ve reorganized our lives in large parts or at least in small parts around it. We’ve crowded out alternatives. Outside people have begun to collude with this thing then it either didn’t work very well to begin with or at least after a while it certainly isn’t working very well and so then our final step as administers of the statrix is to keep it all going by prohibiting anyone from escaping— Trevor Burrus: Self-help, yeah. Aaron Powell: --or offering methods to escape. And I mean it could be as simple as people who are fighting against voucher programs or private school programs, different things that are trying to emerge up, tax credit programs or people out there fighting against that because they want to keep these people in these schools..

I mean they have their own theory that keeping people on these schools was the only way they can make the schools better and things like that, but like they are trying to prohibit getting out of the system. You have people fighting against Uber and, again, this is the most important thing. Uber, which we’ll get to in the next step or the final sort of hope that I have. It’s not really part of the statrix, but Uber is a really good example of statrix sort of things that can help destroy it because before Uber, most people did not know there was a taxi cab cartel or they kind of knew if they kind of knew that, but they probably didn’t..

And Uber is a really good example of this thing that is so simple. It’s so should have existed. The taxi should have been the one to do it. It’s been the first movers on it but, of course, they weren’t if they had no incentive. Aaron Powell: This is actually—it’s an interesting one as a highlight of your lack of imagination that ends up playing into this because I noticed in some of the things that I’ve been reading recently. So I’ve been listening to a couple of—I bounce between reading chick flick, crime fiction and reading sci-fi and I am on a sci-fi kick and so I’ve recently been—I’m listening to a couple of sci-fi novels and I’ve also been rereading war analysis, great comic series Transmetropolitan..

And I noticed something that shows up a fair amount which is the sci-fi authors make incredibly out there predictions about what the future will look like, and we have all sorts of strange technologies and all sorts of disruptive technologies in the Silicon Valley speak. But one of the things that seems to remain constant (a) is the war on drugs. There’s always like the plots of these always end up having, you know, these—there’s some newfangled drug with a really like cringe-worthy name that we have to set the blast. the Robocop movies or—you know, that they—we seem to not able to imagine that the war on drugs will probably not be around in a few hundred years..

But the other one is hailing a yellow taxi cab..

Yes..

Aaron Powell: But no matter how advanced society is, there still are the scenes where they run after a cab or talk about a cab or have to look for the suspect that got into a cab and we have to—.

Trevor Burrus: Precisely. And even the sci-fi authors you can imagine, you know, ships battling in interstellar combat, you know, never seem to be like Uber. Wow, this is a crazy idea. And I remember the first time I got into Uber. What they did is they came in like gave a bunch of free rides to people in D.C. as part of the disruptiveness, and we can talk about that a little bit more in a sec, but at first I said, “Okay, so a guy is going to pick me up in a car, his car.” I was like, “So, what’s the catch?” I mean because, you know, like selling Amway on the way or like tell me about, you know, all these possibilities for timeshares in Mexico or something..

I mean it was—and then I get in this car and he’s like, he pulls right up and he drops me off and he’s—and I just—I get I’m like, “That was unbelievable.” And that is the statrix. I mean that right there was me getting a little bit of a red pill of being like these are the possibilities you could have, but nevertheless, by the time I was step 7 here, people are trying to prohibit these things most recently in Austin which is reverted to, you know, 1990s situation or early 2000 situation without any good form of transportation when they prohibited Uber..

And it becomes a real problem. Now you can do it—many countries prohibit private—some countries prohibit privately paying for medical costs. Not many do that..

Canada had a Supreme Court ruling that made Canada go back kind of—ruling that made it unconstitutional to prohibit getting healthcare outside the system..

There are people out there who are so devoted to the statrix system they believe and that they think that as I said like the public schools that they need to get everyone inside of it in order to approve it as opposed to trying to think outside the box and be like, “Look, Uber is an amazing thing. Airbnb is an amazing thing.” Prohibiting these things easily. Jitney cabs have been prohibited in New York, the little bus things I was talking about. Licensing is a prohibition scheme which works within the statrix..

People are getting prohibited from just paying with the agreed upon price for a person to cut their hair without a license. These are ways that they try to prop up the statrix, and in prohibition, it works with the crowding out and everything where if they do fully prohibit something, then you get the statrix effect again which is people forget that there is another way of doing things and this is the true harm of the statrix is that you forget that there’s another way Aaron Powell: So the best solution to all of these would be to not get started on it in the first place..

Trevor Burrus: Be aware of it that—I mean I said I’m not going to condemn every government program just across the board. Be aware of these things that seem like a small thing like a tax break for insurance can create a statrix that creates bigger problems than not having that in the first place. Aaron Powell: But once it’s here and it’s here in multiple overlapping ways, can we circumvent it?.

And that is the last sort of step of my talk which is my real hope for the best case for liberty that can be made right now which is not coming out of Cato or libertarianism.org or this podcast..

We have, you know, so many people listen to us..

We can only have some people read our papers or things like this..

For me—.

Aaron Powell: But all of you can tell your friends..

Trevor Burrus: But, yes, all of you can tell your friends..

Aaron Powell: And encourage you to do so. Trevor Burrus: But the entrepreneurship of what’s so called disruptive technologies right now is to me the most hopeful thing for living in a freer world in the future. And I used Uber as a small example that we can write a thousand papers on how there’s a taxicab cartel, but it would never be as effective as a simple person who uses Uber, realizes how much better it is than a taxicab, taxi cartel and then, you know, writes their congressman or tweets or fights for it or just becomes a person who understands it’s a better way of doing things than the same old government inadequate mediocre way. And so Uber—one of these bit coins is another one..

I mean, you know, we talked with George Selgin. It’s been a couple of year and a half ago or something like that but, you know, a really good example of the statrix thing is a lot of people don’t know that the U.S. government didn’t print money until The Civil War really. And so there was private money issued by banks, issued by states in different ways for a very long time..

And we simply can’t imagine how that could work..

And I think if you go back and listen to our episode with George, I’m trying to ask him like how does this even work and that’s an example because I’ve been living in the statrix and I forgot how these things can But we have these disruptive technologies coming in and they’re starting to show people the sins of the statrix. They’re trying to show people that there’s a way of doing things, and they’re incredibly important..

These are very important case for liberty because they’re doing things through entrepreneurship to solve problems that used to be claimed to be only solved by the state. So why did we license taxicabs in the first place?.

Aside from pure graft and pure public choice, we thought that people needed to be assured that they have a safe ride. Well, that’s one way of trying to ensure people of a safe ride. Another way of doing it is with a more market-oriented solution where you have a rating system or reputation system..

You have very quick information that moves back and forth so you can get people off of the thing if they do—if they have a problem. That’s another way of doing it and that’s proven to be better and more effective in an entrepreneurial solution. All these things that we had for rating your doc and all these things that could come up for Airbnb and the way that they actually address the problems that people think we needed a hotel licensing board for, we need to, you know, guarantees cleanliness and things like these..

Airbnb can do it without any of these stuff and with a robust rating system and a robust feedback system and ability to fail very quickly and then fix the problem immediately. These things are incredibly important and they’re starting to disrupt the world and I hope they can continue to disrupt the world because most things have an entrepreneurial solution to them in some way. And the one that I want to point you to if you want to get an idea of the statrix especially if you’re American is to go to a website called neucare.net and it’s a website of a concierge medicine doctor. Concierge medicine is a system where you don’t take Medicare, Medicaid or private insurance and by not doing that, you avoid all the red tape that the government puts on those. You run a cash transaction business as a doctor or a credit transaction. You could go on installment plans, things like this..

If you look at that website, you’ll see things like you pay $30 a month or $29 and under and you get unlimited emails to your doctor and you get yearly flu vaccination. You get certain wellness check-ups that are free for all that stuff. There’s a whole list of stuff that you get and then there’s a family plan and there’s a price list for how much an x-ray costs or how much an MRI costs and everything that’s included..

And if you’re looking at that, you say, “Okay, this is a price list in medicine. That’s crazy..

24/7 access email to my doctor. I mean that’s nuts. I mean that’s like sci-fi, like that is a sci-fi level of bizarreness for American medicine.”.

But you can see that there, and if you look at that, you see you have two reactions. One of them should be “This is amazing. I’ve never seen anything like this.” And your second reaction should be “Who screwed up the world so bad that I have never seen anything like this?” And if you understand that, then you understand the statrix because it’s your fascination by having never seen this before that the statrix created and then the circumvention that this guy—the guy that runs these concierge, and there’s a few other ones too. The circumvention creates a situation where we can see other possibilities, but the thing to be truly terrified of is if that even becomes prohibited and I guarantee there are people who want to prohibit even concierge medicine because of whatever sort of collectivist reason they have..

If that goes away and I can even point you to go to this website and see that there are other possibilities, then people will lack the imagination and more and more people will not even have an idea of how government, how doctors could even have price list or they would just say, “Well, of course, your doctor can be responsive for email” because they think that’s normal and then that again will put us back in the statrix. So, the imagination those things can create, they need to be preserved and we need to create more through more entrepreneurship and more disruptive technology so we can live in a freer and a better world. Aaron Powell: Thank you for listening. Free Thoughts is produced by Evan Banks and Mark McDaniel..





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