Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts

of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org

where you can subscribe, find other episodes, comment on this podcast, and find links to

another information related to today's conversation. Our email address is mailadicontalk.org. We'd

love to hear from you. Today is August 30, 2010 and my guest is Richard Epstein, the Lawrence

A. Tish Professor of Law at New York University and a senior fellow at Stanford University's

Hoover Institution. Richard, welcome back to Econ Talk. Our topic for today is the modest

one of the state of the world. But I'm sure we'll narrow it and focus it a bit. In particular,

I want to get your thoughts on what do you think is happening that is troubling in the economy

and in the wider nexus between politics and legislation, what we might call political economy. So,

let's start with the economy. Well, I mean, I have a prognosis here which is not novel to anybody,

which is that the so-called efforts at major recovery seem to have stalled out and failed. I mean,

the first thing to note about all of this is this is a market in which if you stand still,

you fall behind. Population in the United States is still increasing. If you have a labor force,

which is no bigger next year than it was last year, you're going to increase either the number of

people who have given up and dropped out of the workforce or on the alternative, you're going to

have a higher rate of unemployment. And we are basically treading water in this particular market,

and I think for most people that tends to be the dominant indicator of what's going wrong.

But it's not the only indicator you look, for example, at the stock market and what you see is

it too is treading water. It is now around 10,000, a little bit above that. The high was a little

bit above 14,000. That was already over three years ago. Clearly, what it indicates is that the

capital values in the United States have not increased commensurate with what you would hope to be a

...