Good morning and welcome to the Heritage Foundation. I am the director of the center for free markets and regulatory reform. Here at the Heritage Foundation. I ask for you please, those in the audience to please make that last little check on your cell phone to make sure that they will not interrupt the proceedings today. And we will get started right now. The event today is really designed to celebrate the publication of a new heritage special report called Big Government policies that hurt the poor. And how to address them. United states is a very compassionate country and you have an awful lot of government activities that affect poor members of the population and in one way or another. We have welfare programs, welfare spending at one time or another that adds up to well over 1 trillion. That can be in things like healthcare, directing supports of one kind or another. We are not really here to talk about those policies today. We want to talk about another set of Government Policies, those put in place often for what seemed to be on the surface very well meaning purposes. And in fact they may in some cases be necessary policies of one kind or another for government. But all too often what they wind up doing if you look at the second or third order of the policies, is having a negative effect on poor people. The kind of policies where thinking about here, things that have two main impacts. The first is an impact on prices. And what that means is that the free market is not going to work. Not very well or at all. If the government is changing the relative prices of goods or labor or capital. And there are lots of programs and the government undertakes that have some sort of impact on prices. Unfortunately, because consumption is a bigger part of expenditures of poor people, those kinds of policies would raise the prices of consumer goods and hurt poor people more than rich people. The second set of policies are those that interfere with opportunities of people to work. These would be restrictions like occupational licensing or i supposing about minimum wages in this category also. Things that interfere with the ability of poor people especially to get into the workforce and take care of themselves. That is going to be the focus of our program today. I think youre going to be surprised at how many policies there are. We identified several dozen in the publication and i think we are just scratching the surface. Fortunately we have two very immanent people to start us off with today. Our keynote speaker for the event is doctor Donald Boudreaux and i would say, he is one of the leading economic educators in the United States of america. Im just going to find his actual resume and my list here because i want to tell you he is a senior fellow with the frederick transport for economics at george mason university. He is a board member, professor of economics, former chair of the Economics Department at george mason. He holds the martha and nelson chair for the study of freemarket capitalism. That is not a word you hear very often these days. We ought to hear more. Freemarket capitalism at the center. He specializes in globalization and trade law and economics and antitrust economics. He is also the author of one of the very few blogs online that i got to every day. It is called cafc hiyak. I recommended for those that want to know what is going on in the economic world. After donald we will have commentary and a conversation. Stephen moore is a distinguished fellow here at the Heritage Foundation. He runs what we call our project for Economic Growth. He focuses on a broad range of topics including tax reform, budget and energy policy. He is senior economic analyst for cnn and recently took a leave of absence from his duties here at heritage to join the Trump Campaign as a senior Economic Advisor to then candidate donald trump. Steve is the author of several books including his most recent, fueling freedom. Exposing the mad war on energy. Please join me in welcoming Donald Boudreaux. [applause] thank you jerry, good morning everyone i am wanted to be here. Especially with steve. Im going to start off with when people say that im an economic educator, among economists it means i no longer do economic research. I do not think that is true but i believe that economists, the world can better use Economic Education then using another journal article putting a curly cue at some point and i think that is revealed in the state of current public understanding of economics. The content of public debate during National Election or any sign of the state of the publics economic understanding. I think it is incontestable that the state of that economic understanding is pretty poor. It seems to be the worst in my lifetime. Which unfortunately was well along at this point. On the other hand this fact is understandable and forgivable. Economics even at the most basic level is a unique way of thinking about reality. It is not terribly difficult but it does take some effort. It does take some time, it does take willingness to learn a new way of thinking. Tease the great it does take willingness to see beyond what is immediately obvious to look at what is less obvious. And to wear those lenses requires to put them on inducing. It requires some effort. Once the effort is put forward, it is not difficult. He wanted seeing in reality that would otherwise remain out of vision. In one sense it is not appropriate to scald people for not understanding economics. We live in a world of, we are all busy, we have different jobs, a great deal of economic specialization. To spend time learning economics means that you spend taking time away from doing your job or being with family and taking care of personal matters. So i cannot scold anyone for not learning even basic economics. Maybe some work permit to do that than to say, scold an economist for not learning details of carpentry. I dont know anything about carpentry. The difference is that i do know anything that carpentry must most economists dont that does not affect carpentry. The problem with economics is if you dont understand economics, the lack of understanding when it is displayed through the voting process, it is displayed through the public commentary process. The results are bad economic policies. So my not understanding carpentry does not inflict bad carpentry on the rest of the world. Peoples lack of understanding of economics flips so i dont have any solution to the problem. But i do have a finger of blame to blame and with a very poor job in conveying and understand the basic economics to ordinary people. There are exceptions to this of course. Friedman being the most notable. A handful of others economists and very public communicators we have few of those. The basic truth is not out there in the public mind enough. I want to share, ive tried to instill the basic truths of in economics is irrelevant for todays Public Policy debate and i have distilled them down to a convenient number of 12. I could not quite fit it into 10 but i got it down to 12. So here are the basic truths of economics as i see it. These truths are better understood by the general public. The state of the public debate and the state of politics and policy would be better. It would not be perfect but it would be better. These are in no particular order except maybe the first one. Number one, theres no such thing as a free lunch. I like that phrase could you all know what it means. It means every benefit has a cost. Doesnt the benefit is not worthwhile pursuing or grabbing has a cost. It is not free. And most of these costs often are unseen. The flipside of that is a lot of cost has benefits. To be sound economically you cannot just focus on the benefits they see for the cost. You cannot just focus on the cost and ignore the benefits. You have to look beyond the first stage. Look beyond what the economist calls the first act. There are usually several acts in an economic plaintiff does not end after the first act. Number two, as a general rule, each of us spend there on many more carefully and productively than we spend other peoples money. This seems to me to be indisputably obvious but judging from the Public Policy that comes out of this town, it does not seem to be obvious to other people. A rainy presumption among many people, mostly people on the political left but not always. Is that if you take money from person a and give it to person b. Person b will spend person as money to the person a would spend person as money. I dont get it but it seems to me obvious that each person is a general rule spends our people more productively than others. And when the cost of taking actions rise people are less likely to take the action. In a moment you will see the relevance for the discussion this morning of this. It seems obvious as well. It is more costly for me to do something is less likely i will do it. Probably the most fundamental proposition of scientific economics is the law of demand. A fancy way of saying, when the cost to you taking actions go up youre less likely to take the action and more reluctant to do it. Youll find an alternative way of pursuing. Number four, there is no fixed number of jobs either in a country or globally. The socalled lump of labor fallacy is indeed a fallacy. People on the left, on the right, in the middle, up and down. Often fall for this fallacy. If these jobs are destroyed, what will people do . I think this is a grotesque fallacy. It is belied by history. One of my favorite statistics is looking at the Us Labor Force and the us number of jobs. Civilian labor force and the number of jobs. In 1950, some 67 years ago, Us Labor Force was roughly 60 million people. Today the Us Labor Force is roughly 155 million people. About 150 percent larger than it was just 60 or 70 years ago. And the amount of jobs listings today is about a little higher, percentage point or two as it was in 1950. So as labor forces, the number of people in the economy for seeking jobs has gone up. So also is the number of jobs that tracks the number of people in the labor force pretty carefully. Does the number of jobs. So we see women that do workforce, a Larger Population enters the workforce and jobs are created. As long as they employ the people. Number five, just as there is more than one way to skin a cat there is more than only to succeed economically. Ive never skinned a cat. I have heard this phrase. I will not want to do it. Other two academically theres more than one way to do it. But i do know from personal experience im sorry to say but from my reading of economics and economic history and Business History that there is obviously minimum wage succeed economically. If one way pursuing, the cost of one way pursuing business rises, competitive entrepreneurs find another way to pursue business. Theres not just one way to conduct the business and successful dynamic entrepreneurial Business People are always on the lookout for alternative ways to conduct their affairs. Number six, consumption and not production is the ultimate goal of economics activity. That is the ultimate justification. It is not to employ people, not to create businesses. The ultimate justification is to create goods and services that make peoples lives better as they judge them. Number seven, dont be misled by number six. Economic growth is caused by, driven by, increase production. It is not caused contrary to what they say by increased consumption. Increase consumption is a happy result of increased production. Number eight, nothing about a political border changes the nature of trade. Any problems that arise when nebraskans trade with koreans, arise when nebraskans trade with kentuckians. Any benefits that will arise number nine, when foreigners sell to us, they do so only because they wish to buy from us or to invest in our economy. Foreigners are no more willing than we are to accumulate lots of pictures, monochrome pictures of dead americanstatesman. But to listen to the trade debate today on people in the right and the left he would swear that the goal of most foreigners is to harm us by sending us things like steel and cars and textiles and in exchange for ever greater numbers of pictures of George Washington and Abraham Lincoln. As much as i admire George Washington and Abraham Lincoln and jefferson and Jimmy Franklin and ulysses s grant. None of us engage in Economic Activity to acquire these pictures. We do so because we want to spend those pieces of money or to invest them in the same is true for chinese and germans and mexicans and all of the foreigners. Number 10. A trade deficit is not for a symptom of poor domestic economic performance. Nor is it a source of poor economic performance. It is usually quite the opposite. I do not think there is any topic now that is more misunderstood. At least across the political spectrum than the topic of the socalled trade transmitted trade deficit as many of you i hope no in this room, but if you dont i will say the trade deficit, it, a better term is current account deficit. It is offset by a capital account surplus. When america runs a trade deficit means americas running a capital account surplus. Foreigners are in our country. I fail to see how that can be bad for us. Fantasy a trade deficit reflect economic performance. Usually when i invest, invest in companies and sectors i think has promise. Someone says that company has, it is on the growth, the company has a very poor future. I do not rush to invest in it. I tried to take money out of it. Number 11, a trade deficit is not necessarily debt. Economists are to blinkers because of the language we use. Incessantly describe increases in the trade deficit as increases in american debt. It is not the same thing. It can become deputy trade deficit is not identical with debt. Effective principal every cent of the trade deficit is indeed nondebt. So that does not necessarily mean or does not typically mean that americans are going further into debt. Can we not but does not necessarily mean that and the description that deficit as a source of increasing american debt i think is very dangerous because it leads to this apprehension and misunderstanding about the nature of the trade deficit is. Number 12, this should especially appeal to steve because it is bens great teacher. The most important and scarce resource is as julian simon taught, the human mind and free markets. Human creativity is what makes our life and our standard of living possible. Alexander we talk about Natural Resources all the time. Theres no such thing as Natural Resources. Resources are not naturally productive. There may productive by human creativity figure how to use them, how to transform them from goods and services to make our lives better. So these 12 simple points give enormous guidance for Public Policy. It steers us away from policies that while they may be meant to help people, especially doctor poor, they in fact hurt the poor. Especially if you dont talk quickly, one was mentioned briefly by terry, minimum wage. Minimum wage legislation i think is the poster child for such misguided policies. It seems so right. This person is pay less money and we think this person should be paid, lets order the employer. The trouble with that is that the cost of taking action rises and people are less likely to take action as the cost of low skilled workers goes up, fewer low skilled workers are employed. Until about 20 years ago there was widespread consensus among economists that minimum wage does have negative effects. By the way minimum wages can change in the nature of jobs. Even workers who keep the jobs and some employees will make them work harder. The employer becomes less willing to allow the worker to text or one way to employ fewer low skilled workers. But it knocks them out of a job. And getting paid zero per hour is worse than getting paid whatever, if you had a job in the absence of minimum wage. Even the loss of wages not a loss of income but it is the loss of the job experience. The job skills that you get when you are particularly a young person and an unskilled person. Also the distribution of the harm created by minimum wage is notable. I have a teenage son that is raised in Fairfax County. Nice wealthy suburb with good schools. My son has, when he was 16 he was an unskilled typical 16yearold knew nothing. Although he thought he knew a lot. But he never had trouble getting a job. But with the minimum wage does is not only strips some low skilled workers of jobs, the low skilled workers who are just harmed by this is minorities in the innercity. They are the teenagers who do not have their own personal means of transportation. There they was a need to stay home to help babysit their siblings be there the teenagers that have gone to failing Government Schools and so the employer for understandable reasons, that becomes, although more costly to hire kevin my son, the risk of hiring innercity teenagers is even greater in hiring teens from Fairfax County or montgomery county. And so is the teenagers from the innercity that are harmed the greatest by the minimum wage. There is a raging debate in economics today. Does it really destroy jobs or not . The bulk of evidence still shows that the minimum wage destroys jobs. The bulk of the job losses are among innercity especially poor families. There are people who dispute this and the empirical evidence i think is conclusive. There people that say the empirical evidence is not conclusive on the matter. If you read the New York Times you would swear that the empirical evidence is conclusive because eight say that the minimum wage has mysteriously no effect on the number of jobs who seek to find if you want evidence in the literature that low Skilled Labor among all goods a