The size of firms

Welcome to the Stephan Livera podcast.

Hey guys, it's your host Stephan Livera. Today my guest is Per Bylund. He is the assistant professor and records Johnston professor of free enterprise at Oklahoma State University at the OSU School of Entrepreneurship, and he also recently became a fellow at the Mises Institute. A few remarks before we get started. This interview isn't as directly Bitcoin focused, rather it's more focused on Austrian economics and related to the size of firms and what we might anticipate happens in a more sound money, free market world. The structure of companies now is such that they are bloated due to regulations keeping out competition and exaggerated economies of scale. This can have applications in the Bitcoin world, such as the way we think of centralization into large Bitcoin mining operations, large Bitcoin exchanges, wallets, hosted service providers, etcetera. So in this discussion, I wanted to speak on this theme, as we move to a free market capitalist Bitcoin standard world, what might the structure of the economy look like? So here's the interview. Hi Per, thanks very much for coming on the show today.

Thanks for having me on, this is fun.

Yeah, Per, I was really impressed by some of the work you've been putting out on Twitter and just recently some of your articles as well, and I know also recently I saw that you became a fellow at the Mises Institute, so big congratulations on that first of all.

Thank you. That's, that's quite an honor to be a fellow at that great, Mises Institute. I've been with them quite a while, but, but I mean, I think this

Have been one of the few to get that honor.

Yeah, excellent. And I've been quite impressed by some of your work recently where you were coming out and discussing the structure of firms, and, you know, it relates to the theory of firms and the size of different firms. And so one comment or one thread that I saw you talking on was this concept that in a true free market, we may see smaller companies than what we have today. So Per, could you please outline some of the thinking behind this and why should we anticipate this?

Sure. There, there are several things. I mean, in, in my scientific work, I I theorized on the firm, and my dissertation was even on the theory of the firm, which is really, trying to put together an economic argument for why there would be integrated sort of islands of planning in the economy. and it's not obvious if you start with the economic theory that the price mechanism works well and, and competition is good and all this stuff, right? That it, it doesn't make sense that there should be these big islands of production where everything is sort of centralized with central planning, even though it's Several islands of this rather than the whole economy. I mean, why is that? That's, that's the original question that Ronald Coase asked back in 1937 already. so I've been looking at this a little bit, and I mean, the, the short answer is that regulations really have only one effect on the economy, and that is to stop entry. so it, it, it's, it creates barriers, for new entrants, and if we- I want a functioning marketplace, an efficient marketplace. what we want is competition. and as an Austrian, I realize that competition isn't simply the number of firms available, but competition really is, the potential for new entrants undermining any incumbent's position. A-and what reg-regulations do is really restrict new entry, which means that the, in- Incumbents can grow larger, and since today's economy is heavily regulated, the conclusion is that firms overall are much bigger than they should be. Of course, there, there are many nuances to this argument too.

Sure. Now, I like what you're saying there. And now, many people within Bitcoin and, elsewhere in the world, they speak in a sense-- and now I don't necessarily agree, but they speak in this sense that, "Oh, we need better clarity before we can move into this space. We need better regul--" Regulatory certainty and clarity. So how do you sort of contrast that against this idea that regulation restricts competition?

Well, I mean, there's a whole literature on institutions too, and what we mean by institutions is really- Rules, formal rules or informal rules or just, patterns of behavior in a sense, right? and what that means is that it's easier to predict how people are going to react. streets would be a, a good example of a formal regulation where you're only allowed to drive on the right side here, the left side for you. and since everybody drives on that same side, we can expect them to do so, and we can drive faster and get where we want, sooner. So many of these institutions are provided by markets and by property owners and so forth, and some of the regulations that the government imposes on the economy are really co-opted by the government. And many, I think, they are sort of fooled by this thinking that all of the regulations that government imposes on the economy are intended to make it more efficient, and that's often the language used, when introducing these regulations too. So I can sort of understand where they're, where they're coming from, thinking that, they, they need to, need more clarity in terms of what, what is allowed and what isn't so that they can Predict better and they can position themselves better, with respect to what will happen in the future and so forth, right? but what this really means Is that, of course, if, if you restrict entry to one sector of the economy, so you have one monopolist, then they will be able to position themselves perfectly within that industry, 'cause there is no threat whatsoever. That isn't, a good situation for consumers. It's a, it's a good situation for that one producer potentially, right? Those are two different issues, and we need to be able to- keep two thoughts in our heads at the same time, thinking about this. I mean, some regularity and predictability is a good thing, as in, say, the, the court system, for instance, that they should when they have a certain amount of evidence, they should, they should judge in one direction and not just at random. And that sort of thing. But that, that can be provided by the marketplace itself.

Fantastic thoughts. I think it's, it's around the difference. It sort of brings up that Hayekian concept of law versus legislation, and so in some cases, the market can provide a certain level of clarity, or even in this example of, let's say we had a market-driven law, well- And you contrast that with, say, government driven law.

Yeah, exactly. I mean, if, if it's legislated, then obviously if it's imposed from above, it is going to favor some interests over others, right? If it sort of bubbles up from below, then it's going to be some form of consensus, and we're also gonna get only those rules where we can get sufficient agreement, whereas im-imposition of those rules from above You basically just need someone able to impose them, and then you get them. And that, that has nothing to do with, actually being in line with people's values and interests. It just means that it's in line with that one person or that one interest imposing those rules.

Right. And if we have better rules, and as you're saying, the competition isn't simply the number of firms available, what are some ways by which we can judge that we do have higher quality competition?

Well, that, that's, that's sort of the, the problem, in a sense, 'cause measurement of competition, w-what I mentioned before is that what real competition is really the threat of an entrant. So in a sense, I think it was Rothbard who asked at some point how many firms are necessary for there to be a competitive marketplace, and the answer is one. even if this isn't a monopolist, it's still a competitive, market, a competitive market industry, if there are no artificial barriers to entry, 'cause that means if there's still only one, firm, that isn't a problem if that firm is so efficient and so, produces at so, so low cost that no one else can compete with them, then it's still, To the benefit of consumers, and that's, that's what the, the market economy is trying to do, right? To satisfy the wants of consumers. So it's, it's not a problem that you have one producer, it's, it's a problem that you have one producer that isn't actually efficient, so that they're, producing at a cost that is much higher, than- than what the cost should be, so that they're basically exploiting the situation and they're, they're being inefficient producers, really, that's what we're talking about. I mean, that's a problem.

So Per, that brings me to that idea of How do we move into a world where we might actually have more smaller businesses that are still multinational, international?

Well, the, the obvious answer, would be to get rid of regulation, any type of privilege, which really is a restriction of the, the, the potential threats to your business. if we get rid of all those, then we would get, in a sense, the efficient number of businesses using whatever, production technology, they consider best But in each industry. how many businesses does that mean that we will get? I have no clue, and I don't, I don't think we can say, based on theory how many there should be. It depends on what they do and how they do things. so it might, I mean, in one, extreme, it could be a, an economy where you have Highly cost efficient producers, but only one in each industry, only one producer of each, each good, and that could still be a market situation and a fully competitive situation if there are no barriers to entry. So it's not really, we can't really say that there should be a whole lot of firms or there should be even worse, twelve hundred firms in each industry or whatever. the only thing we can say is that it, it will be to consu-- speaking to consumers' interest as far as possible if there are no artificial barriers to entry. So in that sense, there shouldn't be No regulations whatsoever, and that includes, intellectual property rights and things like that too.

Oh, agreed, agreed. And so i-in such a world, what sort of different structures might we see? one example I was thinking is we might see more self-employed people versus salary workers.

Indeed. I mean, the re-- one of the reasons people don't do more of this so-called gig economy today is, it's not technological- Reasons really is, is that what, what is required very often is a formal employment, and here in the US, for instance, if, if you don't work full time, de-defined in, in this In this case, it's 35 hours a week for an employer. you can't get tax subsidized, healthcare insurance, which of course is super expensive in this country to begin with, but, you don't wanna work 30 hours for someone else, and you also don't wanna start your own business if you think that you can make enough to have an okay life, but you can't afford that health, health insurance, right? and many other benefits are, are based on On, basically privileges to employers, tax benefits and so forth. so many people I think would choose to work fewer hours, they might work a whole lot more with charities and things like that, if they didn't pay taxes, if there were no regulations, if they weren't, dependent on an employment per se. I think in terms of the, the market structure overall, we would see a whole lot more local and differentiated, production. Simply because people's, what people re- want from pro-producers is very varied. many people want, I mean, buy local is a, is a big thing in, in, say, vegetables and things like that. but it's also important for people in many other things to, to support their local contractor and their local whatnot. and they, they are, are more willing to buy for, from a local seller of goods than they are to buy from someone who's just sort of repackaging stuff from China or something like that. so that's part of it. The other part is simply that, that, transportation is heavily subsidized, at least indirectly, in the world as it is today. I mean, we generally have free roads, and, and by free I mean tax- they are subsidized, right? and, and since it's not pay for use, but it's, it's simply pay because of income or because of ownership of a car or whatever it is, you're really subsidizing those who use roads very heavily. so it, in a sense, relatively speaking, it, it, it pays to use the roads as much as possible, which is partly why we have congestion in bigger cities But it's also why we see so many trucks on the roads. and since we have this, subsidy, subsidy of transportation, it Makes sense to have one big ass factory somewhere producing tons of goods and then transport them very far distances. And I think this has really caused a, a problem in the economy overall that, that production itself, since, since we have this implicit subsidy of transportation Most innovation and most thinking about production techniques and production technology is about using the economies of scale as much as possible. In other words, the technologies used in production today are optimized for a situation where economies of scale should be used as much as possible rather than differentiation. So there's a In a sense, a, a government subsidy of commodification of goods, whereas we would probably see local variety in much greater extent. We could see an economy where production is really targeting small scale, and you can do that efficiently too, it's just a different technology. And today, it doesn't make any sense to, to, invest in research and development for small scale production, for the simple reason that large scale production Production is sub-subsidized through transportation and through tax deductions and special subsidies for, for big plants with plenty of employees and things like that, right? I mean, if you have a big company, it's not hard to get the government to- To give you a lot of, special deals, to support your business, 'cause otherwise you will, you'll fire a lot of people, and politicians don't like that. So, I mean, Amazon's HQ2 in the US here is a good example where they basically- had a call for proposals from local governments saying, "Okay, we want, we, we're going to establish a second headquarters somewhere. What can you offer us on a taxpayer's expense?" And then they let cities, bid over each other basically with taxpayer money and infrastructure, investments and things like that. I mean, of, of course, you don't start a local small scale firm and or invest in, researching, small scale, production technologies if you have this type of deal offered to big players but not to smaller players.

Yeah, fantastic insight. I think this point around the transport cost subsidy is not very well appreciated and not well understood. So then, I think that brings me to the next idea, which is, can we move towards this sort of structure, as in smaller businesses, you know, more free market, even if governments don't reduce regulation, through things like, say, jurisdictional shopping and trying to, you know, arbitrage of a sort towards- Favorable jurisdictions, or do you think really that government regulation acts as the blocker for us?

Well, it's, it's a blocker, in a threshold sense, I, I suppose. I mean, technology can be used, and it's, it's used by governments too, but technology is very often more, more effectively and more efficiently used, by private interests. and I think there are- The, the type of institutional competition that you mentioned, I mean, shopping for, for rules and legislations within a country or- Basically saying that we will move to the other country if, if they change their rules or politicians, stepping ahead and saying, "Hey, if you come here, we will, we will lower taxes." I think a, a famous, US example is Kansas City, which is on the border between Missouri and Kansas, the states, where both states have tried to attract businesses, and every time they lower the taxes, the businesses just move to the other side of town. to save on, on taxes. And, I mean, and it, it, of course, that, that works. that, that's not a, a, it's not a big problem for the businesses, and the businesses will of course follow whatever incentives they have to lower their costs and, and taxes. That's a, that's a huge cost, right? I think what, what we're going to see a whole lot more though is, Private businesses doing what Uber has been doing, which is basically create new categories. So, when When leg-legislation is a wet blanket on a type of industry and is really stifling competition and innovation, such as in the taxi industry, where, say, New York City, they have the medallion system where there are only a certain number of medallions and only if you have a medallion can you have a taxi. that sort of thing. So there's really no competition because the number of medallions is so much lower than the market, provision of, of, taxicabs would be. Uber understood that they couldn't take on taxi businesses the way taxi businesses were doing business, in that regulated space. 'cause then they would have to follow those regulations, so they would have to start a call center, they would have to buy a whole fleet of cars, they would have to hire the, drivers and all this stuff, right? Which just means, okay, well, if you're doing something exactly the way the incumbents are doing it You might be a little bit marginally, more cost efficient 'cause you're new and you're trying different ways, but the scope or the, the space available for innovation isn't all that great. So what they did was simply say, "Hey, wait a minute, there's a technology, that allows us to do something completely different. simply connect willing drivers with people who want to get transportation from A to B." So they didn't start a taxi business, they're of course competing with taxi in the sense that they're competing for people wanting to go from A to B. but they didn't start a taxi business, and they argued, and they still argue, that they aren't a taxi business, they're a ride, ride-sharing service, right? Which means that the regulations that apply to taxi may not apply to Uber. And of course, you, you see a lot of pushback from government agencies and things like that trying to claim that, that, oh, it's, it is still a taxi business, or they're changing the definitions, or they're, they're sort of pushing the boundaries of, of what a taxi business is in, in their own le-legal, definitions and things like that. we think California- has ruled that, well, if you're driving for Uber, you're really an employee, so they basically changed, the definition of what an employee is. other, other places like Columbia, Missouri, I, I lived there, for several years. What they did was simply saying that, well, you're not allowed to- to operate in the city because it's not a regulated space. And before we, decide whether you're a taxi business or something else, and if you're something else, that we regulate that business space, you're not allowed to operate at all. Which of course is, is a very strange way of looking at it. It's basically saying that unless you are approved by a government, you can't do anything at all. Which is not how we usually think of, sort of America as sort of the mix of capitalism and whatnot, right? But yeah, exactly. But governments, governments very, very often do this. I mean, they, they, they see that their power is undermined because the categories that they have created, the, this space that used to be taxi companies, and they were all run in a certain way 'cause that's the only way they had figured out, and that was probably inefficient. Way back then. so they regulated them, and then you have this, new entrant using different technology and a different idea altogether, and they don't fit in that category, then of course governments panic 'cause they can't, they don't regulate and they can't control and they can't tax properly and all this stuff. So their first reaction of course is to stop everything, in a sense. Yeah. Which is, which is crazy. But, Uber has also managed to- get rid of a lot of regulation, because of course, of course, incumbent taxi businesses, they aren't happy with Uber, competing with them for the same customers, but from a different regul- regulation-wise, a different type of market, right? And whether it's Less regulation or it's just different regulation that you can still use that to your benefit, right? So they want an even playing field and all, all these nonsense that they're claiming, right? Which has often led to, local and regional governments deregulating, the taxi business a little bit to make it easier for taxi businesses to compete with Uber. And I think this type of sort of institutional- Evasion is a, a very interesting way of, deregulating the economy. It's, 'cause it, it really means that you have entrepreneurs finding a new market space where they can compete with an old, an existing market space, but in a very different way, and they're using the lack of regulation to their benefit, to their advantage.

Right. And so it's very much a phenomenon of fitting a square peg in a In a circular hole, if you're trying to, government is trying to apply this box or this bucket or this category, and then try to sort of force you, force it to be one certain way. I think another kind of common area is financial services. So then there's a lot, there's a lot of regulation, you know, large banks and financial institutions, they have armies of compliance and risk staff that smaller banks and upstart competitors can't necessarily, have. Do you have any thoughts in how, in terms of how the reg- Regulations there drive centralization into larger banks and larger financial institutions.

Well, I don't know the, the regulation specifically, but I mean, it works the same way there. I know it's heavily, heavily regulated, just like healthcare, and higher ed too, which means you're gonna get bigger and bigger players. And, I mean, how, how do you gain ground in a heavily regulated industry while you merge with someone else or you, you buy them up basically? So it's mergers and acquisitions Decisions. That's, that's how you, how you improve the business, and that's how, how many incumbents try to,

become leaner in a sense by buying a, a business that looks like they have synergies so that they can cut, cut down a bit on, on the number of, of people employed and maybe offer Whatever services they already offered, but use that department for, to cover more, customers at once. I mean, that's the, the only thing you can do really. There's, there's no incentive for innovation because regulation doesn't only stop new entrants into your business base, it also means that any regu-- any innovation Could fall on the outside of what, what is, permitted. Which means, which means it just means that the, the space for available for research and development and trying new things, it's not really there, right? I mean, banking and finance is a very special industry too, because they basically have the right given to them from the Federal Reserve and the central bank in whatever country you're in to create new money. So it's, it's a It's a very strange, type of industry. I, I'm not sure, I'm not sure you can actually call banking a, a, a market phenomenon the way it is today.

Oh, interesting. So you think it's, I mean, and that really makes sense, really, it's kind of more driven by government regulations. Okay, so then imagine we lived under a more sound or hard money standard. Do you have any thoughts on how, you know, what that transition to a economy with smaller companies might look like or how long that might take?

I don't think it would necessarily take all that long. I mean, it's, as soon as the subsidies, go away, I mean, then the, the true- Cost of, not, not, not the economies of scale, 'cause economies of scale will still be there, but the exaggerated economies of scale, which means there are diseconomies of scale after a certain point, right? Where you produce too much and then you have to transport too far away from, from the plant, those are diseconomies of scale. As soon as those costs become, obvious and those- Players have to cover those costs. I mean, businesses are really, really good at responding to costs, because their whole survival really depends on covering their costs, right? Because otherwise they're gonna suffer losses. So as soon as, as soon as those subsidies are gone, I mean, just, just introduce- Say paper use for, for roads and, and whatnot else. You will rather immediately see that, whoops! prices for transportation are gonna go up 'cause usually a plant doesn't have its own, logistics network, right? They use something else, and all those truckers, trucking companies, they're gonna raise their prices to cover the costs that means a lot of these, producers are gonna consider options, they're gonna consider rail, they're gonna consider air, they're gonna consider what are, what other options there might be. And The cost is still going to go up, I mean, then they're, they are forced to raise their prices, and that, that might be raising them too far, so, or they might be at the wrong end of, of the, Demand curve so that raising the price means that they're actually losing revenue quite a bit. right. And that really opens it up for any entrepreneur in a local market to say, "Hey, we'll, let's offer something that people here, say, in Tulsa, Oklahoma, where I live," People here, they, they really fancy, I don't know, slippers produced in China, but not at this high price. Rather, they would like slippers with that look in a certain way or they're more cowboy or something. Maybe that's the case. But that wasn't the case with really cheap plastic, slippers from China. But since the price of those slippers went up, there's an opportunity for a low Local producer. And I mean, that's gonna happen very quickly, I think, this, this type of transition. It's gonna mean, mean a lot of losses for a lot of those, large scale producers, too, of course.

Right, right. And I think the one challenge that I perceive, and, and, you know, we, we, we all face this as free market, capitalist, libertarian types, we have to try to articulate why exactly some of these companies are unnaturally large relative to what would exist in a truly free market. So as you were saying, the exaggerated economies of scale. Now, if you're trying to explain that and articulate that to somebody, what might some potential indicators of unnecessarily large companies be? So could it be that some of these companies you can tell because they've got really poor customer service and they just still survive anyway, or could it be that maybe they've got poor reviews and work-life balance of employees or any, anything else?

Well, I mean, probably all of those. I mean, poor customer service, that's usually a government business. or it's a, a sort of public utility type of,

local monopoly, like cable TV in the US, for instance, or electricity, power, gas, things like that, right? They, they usually have pretty, pretty horrible customer service because you only have one place to go anyway. I think another metric would probably be bloated, administration or bureaucracy. So you would, you would have Way more levels of decision making within the firms, than would otherwise be the case. I mean, in a sense they, they would be just overall bigger than, than they would otherwise have been, and with bigness comes bureaucracy. So they really run not like entrepreneurial businesses, trying to produce value for consumers, instead they al-- have already established that they're producing this type of commodity, whatever it is. And then the whole business is targeted towards controlling production and just pushing out more of this, this commodity. Investing in, in the politicians. I mean, that's a probably a good measure too. whatever, whatever businesses is, well, over here it's called campaign donations, right? when you, you buy the services of a politician.

Yeah, so I think, I think I like the insight you're giving there around bureaucracy as a potential indicator of companies that have just grown unnecessarily large, and the, the, that sort of company might not exist in a truly free market, or at least it wouldn't Might not be as big as it currently is.

Well, it, it, it would anyway, it would, would, create a whole lot of value. I mean, the, the way I teach this, and I think it's true too, so I don't, I don't just teach bullshit. but the, the way you start a business is, is not thinking about cutting costs really? what, what you do is you figure out a customer segment where you can produce something that they, this specific type of customer, considers extremely valuable. And then you charge a price that is much, much lower than this value that consu- those consumers, think that your good or service has. And then your job is really to make sure that you can produce this good at a cost that is lower than the price you're charging. Right? for, for these businesses that are way too large, what they're doing is just pumping out these goods, and all they see is the price of the cost, and they're trying to minimize the cost rather than, maximize the value for the consumer. Right? The, the way you, the way you, outcompete others isn't really to do it head on, producing the same commodity at a slightly lower price. The way to do it is really diversification, right? And diff-- and, and, well, sorry, differentiation. To produce something that is tweaked towards a specific customer segment where you provide them with such Immens value that they're, unless you're an idiot and you're charging way too much for it, they're gonna choose your product every day of the week. So they, they are so much better off every time they buy your product that they're gonna do that no matter what. So it basically sells itself, and then you keep your production costs lower than that. And of course, what that means is that you can target pretty narrow customer segments. And provide them with hu-- a lot of value, and then your competitor is, is targeting a, a customer segment that is adjacent to yours or that is close to but not exactly the same, right? Then you can then potentially expand into the next one and compete in sort of secondary markets, but you already have your own market. I mean, you, you don't see that in, in the-- those businesses are way too big, 'cause the only way they can cut costs is to- Cut, in differentiation, right, to increase volume of a very standardized product.

Yeah, I like the insight around really thinking of it like you just want to give your customers extreme value rather than sort of trying to play this game of just trying to slightly undercut the competition on a cost point of view.

Yes, and I, I think a lot of even small-time entrepreneurs, they completely miss that point, which is Very sad. I mean, I, I have a, I experienced this, rather recently here, where I had to use a, a plumber, and the, the plumber showed up and he didn't have the right tools to do what I asked him to do, so he went back home, and it took him like 90 minutes to go back home and get the tools and come back, and he charged me for that time. That time, of course, contributed absolutely zero to the value I got from his services. Right? He didn't think of the value he was contributing to his customer, he was thinking just about charging for the time. And this is a bureaucratic business, not an entrepreneurial business that does this, even though he was probably self-employed. But plumbers are heavily regulated, so they get to overcharge for their services, and there's a limited supply of plumbers, 'cause you need to be licensed by the state and all this crap. So of course he could charge me for his time, 'cause I needed that fixed no matter what, 'cause I had flooding and everything, so I needed someone to fix it right away. And to me then, well, okay, I guess I will have to pay him for those 90 minutes driving, or maybe he took a nap or something too, I don't know. I mean, there's no way I can tell, right? But I know that he wasn't working on fixing the problem. Had he instead focused on providing value to me, he would say that, "Okay, well, I can fix it right away for, for this amount of money. Is that okay for you?" Or, or Would that be an appropriate price? Can we agree on this? And then no matter how, how much time it takes, he will still charge that amount. I mean, because then, then you have established that whatever you're charging is lower than the value to the customer. So So you are providing value, and which is the whole point of a business, right? And that, that way you can, you get a good reputation and you probably get more customers and so forth.

Yeah, fantastic. Okay, I just wanna change gears now. There is one other topic that I've seen you comment on, and I think it's a very confused term or understanding. It's around this concept of scarcity and post scarcity, alright? So I've seen you comment, previously Obviously that some people mistake, you know, what the understanding, what is scarcity, and they think, "Oh, well, we're gonna be in this sort of post-scarcity world." So can you maybe outline where they're going wrong in that thinking?

Sure. I think it's a, a difference of between the colloquial use of the terms and how they're used in actual economic theorizing. And then you have these, a lot of people using the colloquial meaning of these terms to pro- Lose new theory, and very often in this case it's because it, it fits their political view very well, right? So scarcity, I mean, for, for an economist, scarcity means simply that there is a limitation. There's a choice to be made, you have to choose whether to use it or with how much to use of it, 'cause there is always a trade-off. That's what scarcity means for an economist. so it can mean anything from simp-simply that, "Well, I'm in this space, which means you can't be in this space at the same time," so there's a scarcity of space. And time, I do this now so I can't do something else at the same time, I have to do it later. Well, there's a trade-off there. So, there, there's a scarcity of, of time too. And of course, this goes for any type of resource. It can be used for something else or it can be saved for the future, and you have all these trade-offs all, all the time going on in Bitcoin. Where scarcity, colloquially, really means that, oh, we have almost nothing left of this. So when we say time is scarce, it usually means that we're in an extreme urgency or extreme rush right now, right? It, it doesn't mean that we are going to die in fifty years, which means that we have to make good choices. That's not what scarce, scarcity of time means. So taking this colloquial meaning, people think that, well, we, we have so much- much now, and we're so well off that we, we can't afford making poor choices. we can afford taking from the rich, giving to the poor, even if that means we don't get more growth or whatever it is. and that's usually how people view this, this both the post-scarcity society that we live in today, because they think we're so rich so we can't afford to make poor choices. That, that's, that's basically what they're saying, and that always seems to fit very well with, those who want a huge government and very few private businesses and, and all of these things. So it's, it's in a sense a theory formulated, based on a political agenda rather than anything else. but it's also used, As strangely, a, an argument against sound economics thinking, s- basically what they're saying is that we don't need to make trade-offs at all because we have so much

Exactly, and the, I think that one of the key insights is just around the scarcity of time. Even if we have a massive abundance of things, we still are scarce in terms of how much time, you know, you and I can go and spend doing the things that we love to do, and we have to make, necessarily, we must make trade-offs in that.

Yeah, exactly. And, I mean, it's-- we, we are going to die someday, and we want to make as much as possible of the time we have here on Earth, and, and that's a scarcity in itself, 'cause that means we have to make choices all the time, even if we had enormous riches. I mean, if, if you think about it too, if you, if you read some historical documents and, and you read, what thinkers throughout time have, have said, then it, it-- you will notice that all of Of them have really, or at least at any point in time, you have several people claiming that this is the height of civilization, we can't go no farther or we don't want to go any further, because we are happy already, right? So we're at this advanced stage right now that we don't have to move on. We, we can just stop everything the way it is right now. And I mean, imagine if people had, had believed that and had actually stopped in 1850.

How many of us would actually be alive today if we had stopped back then? We wouldn't have any vaccines or, or antibiotics and things like that, and we-- so mo-most of us would die way earlier than we actually will, and many of us would probably die in childbirth. And, and, and all of these things. So, they're, they're missing the point saying that we are rich now doesn't mean that it's a bad thing to get even richer, 'cause richer is really about the well-being, in general, which means leading long, happy, healthy lives. I, I don't see that as a downside of, of growth at all.

Yeah, fantastic, insights there, Per. look, I think the other key things I was looking to- Discussed today, I thought, you've brought some really great insights and they're very applicable for, people who want to an-analyze the world that we live in today, and especially, you know, if you're into Bitcoin and you wanna look at the centralization of large companies, but and, you know, maybe what's driving that large centralization can actually be, in these cases, regulations and various subsidies, as you mentioned, such as, this transport subsidies. Right. I think

they very often focus on, on the impact of technology Right? That, that with, with, blockchain technology, say that you, you can, you can control the information flows and you can trust the information so much more than you, you could prior to blockchain, and therefore businesses can be smaller. And I think that, that is true in a sense, but the reason businesses are large today isn't really control of information, it's in response to, regulation. So they're bloated, that's what we're talking about. It's, it's not that they're- They are, sized, in order to be efficient for the production that they're doing. Instead, they, they are bloated because they're protected.

Yeah, that's a great way to summarize it, I think. Per, maybe you can just Tell the, the listeners where they can find you, say on your Twitter, your website, your books, your articles.

Sure. So, I tweet quite a bit. I tend to create, tweet, long, what you call it, tweet storms, right? And, and strangely, when I have really long ones, those are the most popular ones. Haha. I don't know how, how that works, 'cause Twitter is supposed to be very short messages, right? But when I have tweet storms, I say twenty-five, thirty tweets. those are the most popular tweets. so, so your listeners can find me at Per Bylund, this P E R B Y L U N D. and my website is, simply my name dot com, so P E R B Y L U N D dot com. I have Two books from twenty sixteen, one that's called The Seen, The Unseen, and The Unrealized, in which I, as, as you can probably tell from the, the title, it plays off of Frederick Bastiat's The Seen and the Unseen, but it adds the unrealized, which is really a new dimension, looking at the opportunities that simply don't materialize in a regulated world, and I use that as an argument against regulation. it's intended as a sort of, textbook for advanced, undergraduates or, or an intellectual, intelligent, public so it's, it's, it provides an introduction to how a market economy actually works and then introduces regulations, and so you, you can sort of follow step by step what happens when you introduce regulations in a, in a, in a working marketplace. And then my other book is, is sort of my theory, contribution where I discuss the theory of economic growth in a sense where,

Adam Smith already talked about division of labor, how that, makes us so much more productive. and he said that the limit of division, the division of labor is the extent of the market, which is really the, how many you can reach through the price system, you can say. what I argue in this book is that in order for the market to become more efficient, it's not enough to become better and better within this extent of the market, but to expand the extent, and that's what is Real economic growth, 'cause the economy itself becomes able to produce so much more, value. And what I do is to produce a theory for how the market overcomes this, this limitation, which I call the specialization deadlock. So it's, it's an interesting, I think it's an interesting theory, it's definitely more Austrian theory than, than the other book, which is, more to the libertarian

Yeah, understood. Yeah, that sounds great. also Per, do you, Per, do you have any, anything upcoming that the listeners should look out for?

That's a good question. I have plenty of research, which, is probably gonna be behind paywalls and be ridiculously expensive to read and probably boring as well. I am working on several book projects, but they're sort of long term. So there's one short book on entrepreneurship that I am I've, I've sort of contracted but not actually gotten started with, but I hope to get that published within, within a year or two. and I'm, I'm also working on get-putting together a sort of more A popular style book on what economic growth actually is, 'cause there seems to be some, a sort of type of economic thinking where most people go wrong. So I'm, I'm, I'm thinking of doing something like that too. Exactly when this gonna happen, I'm not sure. So for now, I mean, it's my, my regular columns at Entrepreneur Magazine, where I sort of provide simple insights. It's, they're not very deep, but, it's- That is a commentary basically from summarizing how, how to run a business properly.

Well, thank you very much for coming on, Per.

Thanks for having me, this was fun.

I hope you enjoyed the discussion with Per. You guys can find the show notes on my website, stephanlivera dot com, go to the episodes page, this one will be episode thirty-eight. Let me know what you think of this episode by finding me on Twitter, my handle is at stephanlivera. If you wanna support the show, you can find my Patreon page at patreon dot com slash step Thanks for listening, and that's it from me. Speak to you next time.