Jason Hartman records this show from Germany and discusses what he sees as the effects of socialism. He believes that Americans are more innovative and motivated as a result of capitalism. In the interview segment, he continues a two-part discussion with Dr. Nima Sanandaji.

They talk about Adam Smith’s invisible hand, Nordic society, and the two wrap up the interview discussing where the ideas for Adam Smith’s Invisible Hand really came from, how the Nordic society actually ended up being socialist (and why it doesn’t work in the places it’s being tried now), and the dangers of government growth.

Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 0:53
Greetings from Copenhagen, Denmark, as we get to the second half today of Scandinavian unexcited personalism Yes, that is the interview we started last week with Nima very fascinating guest fascinating topic. Also we talk about the Middle East and where capitalism started. And you know, it’s interesting as I’m here in Denmark. I’ve been in Budapest, I’ve been in Slovakia. Germany, of course, I think I talked to you from Germany, then traveling down the Danube river, and ended my river cruise. And now I am headed home, but the flight is delayed. So I’m in an airport lounge talking with you right now. The dog is sitting at my feet and anxious to get on the plane as am I but we got an hour and 10 minutes late. So we’ll get there anyway, that I say this is Jason Hartman with Episode 1033 1033. Thank you so much for joining me today. Yeah, we’ll get to the second half from last week. But before we do that, I want to alienate some of the listeners. You So let’s alienate a few of them. I want to say congratulations to Trump to President Trump for exceeding his growth rate goal. Yes. Last quarters GDP numbers are out. 4.1% that is phenomenal. Phenomenal. Yes, we have our reservations about this president with his loud mouth and the zany things he says, but I gotta tell you, like I’ve always said love him or hate him. I think he’s good for the economy. So we will see where it goes. There are some clouds on the horizon. And I want to talk more and more about preparing for the next recession. As we get into more and more episodes. And as I’m here I am listening to a fascinating book while I am traveling in audio book. It’s called debt, the first 5000 years debt the first 5000 years fascinating, highly recommended. I’m only about two and a half Ours in, but it’s fantastic. It’s a must. So debt the first 5000 years I’ll see if I can get the author on the show. really enjoying the book. Very very good as people are looking at me weird here as I’ve got a microphone in my hand sitting in the airport lounge here, but hey, what’s the difference?

Jason Hartman 3:21
Oh was do crazy things like this, right? So it’s been great traveling around Europe as always, I’ve spent about a month here on this trip. But I gotta tell you, I’m glad to be coming back to the US. Like I’ve said before everything in Europe, almost everything not everything, but every material thing where everything is smaller, lesser in lamer. Yes, from a material perspective it could I just cringe when I hear American socialists talk about how we need to become more like Europe. It’s the other way around, folks. It’s definitely the other way around. But hey, it’s always fun to visit. I was born here. So always glad to go back and you Visit, we are getting more registrations for our upcoming Hawaii conference profits in paradise. And I want you to go to Jason Hartman calm and register for that event right away, I think you’ll really really enjoy it. It’s a two day conference, the first one we’ve ever done in Hawaii, we will have our venture Alliance mastermind event in Hawaii right after that, there is a special, you can come as a guest and buy both of those together. So check that out at Jason Hartman, calm. And also, one more thing interesting article in The New Yorker, about Elon Musk saying Elon Musk is a total fraud now, hey, I kind of called this about three years ago. nothing new to me, but maybe new to the rest of the world. And I’ve been talking about it on the show. And I hate to pick on him. You know, he is taking moonshot ideas, right? But everything so far is I think still a failure. Right? I mean, raising money from the government in the public markets is not success. That is not a business. businesses make a profit. Businesses are self sustainable. They don’t depend on just blowing up your stock and creating hype. They depend on actually running a business with a profit. You don’t believe me? Check out the new economy, all the talk about the new economy back in 1999 1998 1999 2000 2001. And then it all came crashing down. It always does. what goes up must come down. businesses make money. They are not considered successful based on stock valuations and zero profits. And they are not considered successful because they raise money from taxpayers. So that is not a business. But we’ll see. We’ll see how it works out. But this is the reason that the government needs to get out of the business of picking winners and losers. The market is much better at doing that. than the government is. And that’s why we should let the market make those choices, not some crony capitalism and the political machine and the government. So yeah, I just had to mention that before we jump into it. But let’s get to the second half of our interview from what was it last Wednesday. And we will talk to Nima kind of fitting that I’m here in Copenhagen given the topic, but let’s go ahead and jump into that. And be sure to register for our Hawaii events. We look forward to seeing you there first week of November. And here we go with part two as we talk about Scandinavian unexceptional ism and the birthplace of capitalism. I would certainly say the US is more capitalistic than modern Europe. There’s no question about that. But both of them have just been diluted down like crazy and it’s so interesting when you look at history, you know, capitalism is just such a natural thing. Yeah, it is like people just they don’t Don’t have to be taught capitalism. They just do it automatically, even where you have these messed up over reaching governments. People are still capitalistic, even in former Soviet Russia. I remember, you know, when I was in Romania, my tour guide, who was sort of a high up in the Russian media work for, you know, the equivalent of the task news agency, I guess, whatever it was in Romania. Maybe it was tasked there, I’m not sure. But, you know, she would talk about how you’d wait in line for two days to get shoes with the shoes would be allocated, and then everybody would just trade them on the gray or the black market to get their size. Right. You know, the start with us capitalism. It was it was the natural thing. Isn’t that amazing?

Dr Nima Sanandaji 7:42
Yeah, I would have to say one thing. It’s one thing to have voluntary trade. But capitalism, as I see is a pretty complex infrastructure around this monitor trade. And this is what we find in Babylonia. I see. I mean, they were much more simple. Just get in today. It’s funny you said choose because you know Adam Smith, everybody think Adam Smith is a founding father of economics, because he described how a free market works. And he described the voluntary exchange on a private market, the Invisible Hand of the market, right. In my book I show First of all, the Invisible Hand of the market had been described in China in the Middle East, thousands of years before Adam Smith, and this is fascinating. Adam Smith, it turns out, when he was giving his university lectures, he used to refer to Xenophon who wrote about the marketplace of ancient Persia 2000 years before Adam Smith, and in his book, he basically plagiarized it because he stopped referring to Xenophon, but the account that Adam Smith gave on how the free market works was actually about Persia, like 2500 years from our time, and it was about shoemakers. He described the market for shoemakers to describe you know how competition And market specialization works. Yeah. And these concepts as you say they’re much, much older than we know. And the created much, much more astonishing development that people today know. Let me just lastly give you the example of the swords that were used in the Crusades. In the crusades, the Muslims always had the strongest metal, right. And for hundreds of years there Europeans tried to duplicate their methods because they had much stronger swords. Recently, scientists discovered recently just a few decades ago, few years ago, actually, why this sorts of the Muslims were so strong, you know, why, why is that they had put carbon nanotubes in the source,

Jason Hartman 9:46
they had to use carbon nanotubes. I mean, that’s something we thought was a some great new invention nanotubes. Yeah,

Dr Nima Sanandaji 9:55
yeah, yeah. Dear industry, private industry for trading metal. was obviously so advanced that they had, by chance, discovered how to put carbon nanotubes in the steel. And this is one of the things, which fascinates me if you read history, people had much more technology and much more progress in the past. And those who had it were the people who were living in economic free societies. So my view of capitalism is, historically we have had islands of capitalism coming, creating massive technology, massive world, and then somebody some violent guy like the Mongols come, attack, kill everybody. And capitalism needs a certain level of peace and stability. So really, the story of humanity is how to have a framework of voluntary exchange and private ownership. And once this framework creates massive world and technological advancement, how not to have an aggressive state or having An aggressive neighboring tribe, invade you and rob you and kill you, and dominate you. This is really the struggle of humanity. Right? Very, very interesting. Now, it’s, uh, you become valuable, you become successful. And then everybody’s trying to get at you. You know, I think that’s the history of the world. But back to my comment on capitalism, I just wanted to say one more thing that I think is interesting. And I would I would call capitalism the most successful and we’ll do this in single quotes, religion the world has ever known. Hey, you know, it’s like we were talking about just how natural it is. Very interesting history. Very interesting history. Before you wrap it up. Do you want to say anything about the Scandinavian Nordic books and you know, debunking utopia and so forth. I love I love that you’ve addressed that subject because it seems that nobody else has. Well, I mean, these books are actually they’re truly books and Scandinavian exceptionalism debunking utopia and in Nordic gender equality paradox. And these books have a life of their own. I think they’re 500 600 times they’ve been quoted internationally, in big publications around the world, really. China, Europe, South America, Canada. And so my core idea is Nordic socialism never has worked instead in Nordic countries are successful because they have an astonishing culture of individual responsibility. And also because they’ve had a long history of small government and free markets, and even today, in many regards, are more free market oriented in the United States. And what is very sad about the Nordics is that they had this astonishing protest on working ethics, which is just mind blowing. And then the socialist calm said, Listen, guys, you have such a strong working ethics, we have a welfare state because everybody will work right? Nobody will take over US government benefits, nobody will stop working. Right? Work short time, because as I shown the research, yeah, if I raise the taxes, you might not stop working because you’re a hard working guy, but your children will be affected because parents tell their children, you know, to adapt. And the Swedish parents, you can see it. They tell their children all the time or be whatever you like, who cares, right? Follow your heart. And they’ve destroyed their own culture of hard work. And also, in my theory, their system isn’t really that good. They themselves have strong culture. So what happens with countries like Sweden has had immigration? Well, the immigrants don’t have these crazy Protestant working responsibilities. They have normal ethics, they come to these countries, they’re trapped in welfare dependency, and they’re trapped in poverty. And then you get a lot of cultural problems. You get to Sweden. redone, the peaceful country has many, many, many, many, many neighborhoods with violence with crime with, you know,

Jason Hartman 14:07
especially post immigration. I mean, it wasn’t before the immigration, right?

Dr Nima Sanandaji 14:12
No, no, not all of them are. Our neighborhood has been many immigrants, right? Every one of them. And a large explanation for this is actually the welfare state system. It just shows it doesn’t work that well. You’re trapping so many people in the welfare dependency. So more people are socially poor than would otherwise be the case. And also this soft liberal approach this soft progressive approach, rehab doesn’t work. It doesn’t solve crime. It doesn’t solve social problems. So you really see that Nordic socialism, Nordic welfare states or a meet. The only thing these people are showing is that Nordic people have a strong Protestant culture. And in my books, I you know, show this that you know, the people who left the Nordics as poor immigrants and came to America, their descendants are much, much wealthier in terms of income than the people of Nordics. And they have either the same or much better outcomes in terms of social outcomes. For example, Americans with a Nordic background have much lower high school dropout rates than the people have in Nordic countries. So actually coupling American style capitalism with a Protestant culture is a much better choice than the Nordic way of adopting a big welfare state. And we’re seeing this, we’re seeing the system fail over time. And with the influx of immigrants, one of my big works in Sweden now is I’m writing a number of studies, which just remind people, the welfare state is not sustainable. There have been many, many big surveys and research project essentially, and they all say the welfare state is not sustainable. You have been like 12 big projects. Trying to look is the welfare state sustainable? And even published between 2002 and 2018? None of them says yeah, it’s a sustainable system, right. Even in the Nordic countries, the welfare state is just a system that is not sustainable over time. Mm hmm. Yeah. Well, what a surprise. What a surprise. Surprise to many because the left have used the Nordic countries as their model. For so long. I think I’ve made a dent in their claims. I’ve seen that fewer people use it now. And the thing is, they don’t have facts. They just seem to have facts. It’s like, yeah, you know, john is a tall guy and he eats carrots. That’s their level of sophistication in their arguments. Yeah. Just a correlation, no causation. They don’t have any causation.

Jason Hartman 16:45
Well, I don’t think the left believe their own arguments. I think they just believe that they want power and control. And that’s what they believe and they’re going to use whatever means you know, the means justify the ends right in their mind to get that You know, I can’t imagine any rational person seeing the results of what’s happened in so many democratically controlled cities in the United States. And when I say democratically, I mean liberal controlled. They’re a disaster in every way. The education is pathetic. The crime is a disaster. The people are oppressed through welfare. It’s a mess. You know, there’s no evidence that any of this ever works in any place on earth or any time in history, yet they persist.

Dr Nima Sanandaji 17:29
Let me just very quickly go back to my book, the birthplace of capitalism. So if you go back to the Middle East, not only did the Middle Easterners have capitalism, they also invented kind of like early welfare state. If you look at the Islamic Golden Age, they had a welfare state, but it was a small welfare state. And they understood very well, that once the state becomes big economy crashes now, you know, Arthur Laffer, right? Yeah.

Jason Hartman 17:54
Oh, sure. I’ve met Arthur Laffer. I have a photo with Oh, yeah.

Dr Nima Sanandaji 17:57
Me too. Actually. Arthur Laffer himself said I didn’t invent the Laffer curve. It was invented by Ian Haldane, the North African Islamic scholar. Interesting. And even Holden’s theory is fascinating. I write about it, you should read my book. He says, Listen, some guy takes over government, a political group. And once you have government, you start expanding government, just to get more influence and money for yourself. Right? Yep, self interest. And more and more groups come and sit by the government people just to get money. So the crowd who is likely, especially interests around the government, become more and more and they’re hungry and hungrier. Now the government has to get more money, somehow it has to tax the people to feed all of the people living off government. And so taxes increase. And Hulu says, ultimately, every time people and merchants and you know will say wait a minute, this is not fair. They’re gonna leave the contrary, they’re going to hide their incomes, they’re going to start working less. And even Haldane doesn’t say that revenues shrink only he says revenues shrink, but government becomes a bloated organization, which cannot slim down. Governments he observed can’t just slim down. Once they bloat. They collapse on their own rate. Oh, yeah.

Jason Hartman 19:22
No, they can they The reason they can’t slim is because the iron triangles, right, that’s the reason they can’t slim is because everybody becomes self interested. And there’s no slimming. There’s only revolution or collapse, right?

Dr Nima Sanandaji 19:37
Yeah, yeah. The best example of this through history is actually the China because China had very sophisticated periods of free markets, very advanced free markets. I cite the old Chinese texts, which are like 2000 2000 years old. It’s like reading Forbes, they’re describing the millionaires of China is like describing the billionaires of America today, who are entrepreneurial capitalists. They have the text about the invisible hand of a free market, which is just even better than Adam Smith. Now, China Trotsky’s history has gone from lessons for free markets to state control that crushes the economy. And they’ve gone between these two extremes many times. And just recently, you know, they had communism, the Chinese were poorer than the Africans were. And then they get some kind of capitalism under the leadership of the Communist Party, but they have capitalism, and they’ve seen the greatest reduction of poverty ever recorded in human history. So really think about one thing, almost every invention you have anything almost gunpowder medicines, either it originates in the Middle East, or it originates in China, paper, you name it. And these countries, I mean, these civilizations for many thousands of years, proved to us one thing, free markets leads to development, to technology to progress and to peace. If you move away from Fremont case you have stagnation, massive poverty, and people are fighting with each other over the resources. So this is why immediately and China go between being very prosperous to being, you know, plagued by violence and chaos and poverty. And he has taught for the Western world. The West has dominated the world. Once you invented Western capitalism, which is like the iPhone, it’s more superior to the earlier forms of capitalism, because you have intellectual property rights, you have corporations, etc. Now, you have seen I mean, the West has been in a free market period for the last, let’s say, 500 years. But this isn’t something given by God. If the Western countries like Northern Europe continue their current policies. I think China, India, many countries, perhaps someday even immediately this will run past them in development, because they’re stuck in a big government high tax model, the Western world needs to learn from history and go back to the free market economic policies such as those like Sweden had 100 years ago. Minimal government minimal taxation, right? Well, of course, first, yeah, that is prosperity from a historic viewpoint. This is I think, much more obvious. Once you have this, like 4000 year view of history, it becomes so much obvious and really, I can’t see any other good interpretation of history. Yeah, well,

Jason Hartman 22:28
these are the kind of unassailable arguments that only in the illogical leftist stuff with an ulterior motivation of power control and their own greed could make an argument against because they just make sense. So thank you so much for coming back on the show today. It was good to have you on previously and sharing these ideas with our listeners. give out your website, tell people where they can find your books, and more information about your work.

Dr Nima Sanandaji 22:54
Yeah, so I have a new website just put up it is called capitalism dot global

Jason Hartman 22:59
capital. As a global NEEMO, thank you so much for joining us.

Dr Nima Sanandaji 23:03
Thank you. Thank you. My pleasure.

Jason Hartman 23:06
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