December 2020

Episode Reprise: Interview with Dr. Walter Williams

[EDITORS NOTE: Click here to listen to the show. In lieu of the passing of Dr. Walter Williams, Ron and Ed are going to re-run this episode during their normal Friday show (New Years Day). They will be live again on Friday, January 8th.]

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Biography

Born in Philadelphia, Pennsylvania, Dr. Walter E. Williams holds a B.A. in economics from California State University, Los Angeles, and M.A. and Ph.D. degrees in economics from UCLA. He also holds a Doctor of Humane Letters from Virginia Union University and Grove City College, Doctor of Laws from Washington and Jefferson College. Dr. Williams has served on the faculty of George Mason University in Fairfax, Virginia, as John M. Olin Distinguished Professor of Economics, since 1980; from 1995 to 2001, he served as department chairman. He has authored ten books: America: A Minority ViewpointThe State Against Blacks, All It Takes Is GutsSouth Africa's War Against CapitalismMore Liberty Means Less GovernmentLiberty vs. the Tyranny of SocialismUp From The Projects: An AutobiographyRace and Economics: How Much Can Be Blamed On Discrimination? and American Contempt for Liberty

Dr. Williams is the author of over 150 publications which have appeared in scholarly journals such as Economic InquiryAmerican Economic ReviewGeorgia Law ReviewJournal of Labor EconomicsSocial Science Quarterly, and Cornell Journal of Law and Public Policy and popular publications such as NewsweekIdeas on LibertyNational ReviewReader's DigestCato Journal, and Policy Review.

He has made scores of radio and television appearances which include “Nightline,” “Firing Line,” “Face the Nation,” Milton Friedman’s “Free To Choose,” “Crossfire,” “MacNeil/Lehrer,” “Wall Street Week” and was a regular commentator for “Nightly Business Report.” He is also occasional substitute host for the “Rush Limbaugh” show. In addition Dr. Williams writes a nationally syndicated weekly column that is carried by approximately 140 newspapers and several web sites. His most recent documentary is “Suffer No Fools,” shown on PBS stations Fall/Spring 2014/2015, based on Up from the Projects: An Autobiography

Dr. Williams serves as Emeritus Trustee at Grove City College and the Reason Foundation. He serves as Director for the Chase Foundation and Americans for Prosperity. He also serves on numerous advisory boards including: Cato Institute, Landmark Legal Foundation, Institute of Economic Affairs, and Heritage Foundation. Dr. Williams serves as Distinguished Affiliated Scholar at the Mercatus Center at George Mason University. 

Dr. Williams has received numerous fellowships and awards including: the 2017 Bradley Prize from the Lynde and Harry Bradley Foudation, the Fund for American Studies David Jones Lifetime Achievement Award, Foundation for Economic Education Adam Smith Award, Hoover Institution National Fellow, Ford Foundation Fellow, Valley Forge Freedoms Foundation George Washington Medal of Honor, Veterans of Foreign Wars U.S. News Media Award, Adam Smith Award, California State University Distinguished Alumnus Award, George Mason University Faculty Member of the Year, and Alpha Kappa Psi Award. 

Dr. Williams has participated in numerous debates, conferences and lectures in the United States and abroad. He has frequently given expert testimony before Congressional committees on public policy issues ranging from labor policy to taxation and spending. He is a member of the Mont Pelerin Society, and the American Economic Association.

Ed’s Questions

Your show Good Intentions, do you think the situation is better or worse, and why can’t we seem to shake this good intentions versus actual outcomes paradigm we’re stuck in?

What, specifically, do you mean by spiritual poverty?

Do you think the current welfare regime contributes to this situation because it encourages this behavior because of the way the programs are structured?

I’ve heard you speak eloquently on the freedom of association and the impact it has from an economic standpoint. Would you mind talking a little bit about that?

I’d actually prefer that bigots self-identify so I could avoid them.

Ron’s Questions

You published your autobiography, Up From The Projects: An Autobiography, in 2010. One story I found fascinating was about your economics professor Armen Alchian, who asked the class: why do we build the Golden Gate bridge when a military bridge would do just fine? He didn’t know the answer. Do you now have an answer to that question?

[Professor Williams recommends the book Universal Economics, based on Armen Alchian’s work].

In 1989, you published South Africa's War Against Capitalism, which sounded like an ironic title at the time. What would you say is the biggest misperception about apartheid [apart-hate]?

Speaking of immigration, what would be your preferred policy on immigration?

Would you be for more legal immigration?

Do you favor a point system, or charging people, to get into the country?

Do you think we’ll ever see a market for body organs?

I find it ironic that Iran allows the sale of body organs, but here in the capitalist west we do not?

You and Dr. Sowell have taught me that a shortage usually has nothing to do with actual physical scarcity but because the price is wrong.

If we had to rely solely on people’s altruism, we’d have a materially lacking life.

If you had a meeting with President Trump, what would be one piece of economic advice would you give him?

Special Event: First-ever live chat (and wine party!)

For all of our Patreon members (more on that below), Ron and Ed will be hosting their first-ever live chat (and wine party)! This event will take place on Tuesday, December 29th (or Wednesday if you are in the Eastern Hemisphere) at 5 pm Eastern Time in the US (4 pm CT/3 pm MT/2 pm PT, others adjust accordingly). Bring your own wine or alternate beverage!

Are you interested in becoming a Patreon member? Our members receive commercial-free episodes (otherwise known as “anti Greg Kyte” episodes), bonus content, and more such as live chats.

Click here to learn more!

Episode Reprise: Business Lessons from A Christmas Carol

On this episode (originally number 73), Ron and Ed explored the business lessons from one of the most recognized and beloved stories shared during the holidays, Charles Dickens’ novella, A Christmas Carol. While many of you know the story and seen one or more of the adaptations, many fewer of you have read the original work which, like most of Dickens, an absolute joy to read and has much to say about business practices.

“It is so good,” says Ron, “that you want to read it more slowly to savor it, like a fine wine.”

Ed is also a long time fan as is his daughter as you can see from this video clip.

Episode #321: Second interview with Dr. Mary Ruwart

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Ron and Ed welcomed back to the show, Dr. Mary Ruwart. Her book Death by Regulation demonstrates the futility of the US FDA and was prescient with regard to the bureaucratic delays we have seen with the vaccine for COVID-19. We explored this topic and more with her.

Ed’s Questions: Segment One
Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’M Ed Kless, with my friend and co-host, Ron Baker, and on today's show, folks, we are so pleased to welcome back to the show for a second time, Dr. Mary Ruwart. How's it going, Ron?

Ron Baker
Good, Ed. We just got a California Bay Area County lockdown.  

Ed Kless
You’re in official lockdown now? Do you have toilet paper and wine? 

Ron
Yes. I'm ready. 

Ed
You're good to go. All right. Well, let's jump right in. I'm thrilled to bring back, as I said the last time on the show, one of my personal heroes, Dr. Mary Ruwart. It's Dr. Mary, right? Let me just read the introduction, then we'll get into it. Mary Ruwart is a research scientist, ethicist, libertarian author, and activist. She received her Bachelor of Science in biochemistry in 1970, and her PhD in biophysics in 1974, both from Michigan State, she had an assistant professorship and then took a position with the Upjohn company in 1976. Dr. Ruwart was also involved in developing therapies for a variety of diseases, including liver cirrhosis and AIDS. We had her on last time to discuss her book, Death by Regulation: How We Were Robbed of the Golden Age of Health, and How We Can Reclaim It. Both Ron and I highly recommend that book. And as I said previously, it's more scary than a Stephen King novel, because it's actually the truth about what's going on with the FDA. And Ron and I made use of it a lot of the times that we've been talking about the COVID situation. We'll say to one another, we should talk to talk to Dr. Mary Ruwart about this. And now we're happy to bring her back on. Welcome back to The Soul of Enterprise, Mary Ruwart. 

Mary Ruwart
Well, thank you. Thank you. 

Ed
And you're okay with me calling you Mary, Right. What a tempest in a teapot that whole thing is. But anyway, let's move on to the more important stuff. You are uniquely qualified to answer some of the questions that both Ron and I have talked about, and that we've been asked by some of our listeners. But let's first talk a little bit about what your thoughts are around COVID. You think COVID is a real thing, right? It's something to be concerned with?

Ed
So that's a question, but it's way down on my list, but I'm going to jump right in and ask. So a vaccine that's been developed for that, how effective is it against those mutations? 

Ed
Sure. Is that what the mRNA is, the fact that they're developing off of the spikes rather than the innards of the of the virus itself? 

Ed
Okay, so that has nothing to do with the spikes that they use. But why is that. Why would doing the vaccine off of the spikes be better than the innards of the cell for mutations? 

Ed
Oh, I see. 

Ed
No, that's absolutely true. But what are your thoughts? Not necessarily on each individual vaccine. Obviously, no one would know that. But the technology that was used by, specifically, Madonna. I read this in a New York Times article that they actually developed it within two days of the sequencing of the genome.  

Ed
Okay, so it hasn't been demonstrated, but it definitely has lowered the symptoms. And this was interesting to me, it was developed within two days, and in my view, and after reading your book, then the last 12 months or 11 months have been process around approval. And this just makes me crazy to think about this. Do I have this right? 

Ed
Is there a difference, medically, between something developed as a vaccine, which is a preventative and something that's developed to, say, for heart medication that lowers blood pressure? Should there be a different testing regimen for one versus the other? In my layman's mind, one is about efficaciousness, the reduction of some kind of a symptom, that's a response. The other is really preventative from you getting something. Once it's proved safe, isn't efficaciousness, shouldn't that be tested in a lot larger samples? I mean, that just my logic. But am I right there? 

Ed
Okay, and you mentioned, and I've heard this as well, that the messenger RNA is new technology. It has been used in certain other cases; I think they developed an Ebola [vaccine] but they just didn't have enough trials to test it. If the technology proves effective, I want to try to use the right words, if the technology proves efficacious, and that taking a sequence genome from a virus and then quickly turning it around in two days, and that proves safe, can we make a certain assumption about a future vaccine? That future vaccines that are developed in this way, are just as safe? Or is that not something that we can assume? 

Ed
You're not a lay person as I, were you amazed at how quickly this was developed? Or was this something that, having been in the industry, you're like, yeah, I've been following this, it was not surprising to you? 

Ed
Just quickly, before we have to take our break, are you concerned about it [the vaccine’s safety]? Is that something that you personally would be concerned with? 

Ed
Right, and that could happen, it's kind of a random thing. Well, this is great. I have so many more questions, as does Ron, but we have to take our first break. 

Ron’s Questions: Segment Two
Welcome back, everybody. We're here with our second interview with Dr. Mary Ruwart. And Mary, I wanted to ask you, I'm not a conspiracy theorist, no tin foil hat. But where do you think this virus originated? I mean, probably an animal. But do you think it came out of a lab or a wet market, an animal market? 

Ron
Oh, that's interesting. In the early days of the virus, give us your grading of the FDA’s response, the CDC’s response? What went right, what went wrong? What would you have done if you were in there? Or advising the president? I know it's brutal. But we do want your opinion. 

Ron
It brings me back to your book. Because if a private company like Upjohn was responsible for that, and they blew it, it would pay a price. And the FDA and the CDC are going to end up getting bigger budgets, I'm sure. Did the government do anything good? 

Ron
I was going to ask you about that, so I'm thrilled that you explained that. I know you know Jeffrey Tucker [Episode #201]. He called the lockdowns positively medieval. What's been your assessment of these lockdowns, restaurants, bars, all these different things? 

Ron
Are you as sick as Ed and I are of “follow the science.” Science is a discovery process, right? It can't really tell you exactly what to do. And then, we know science may not lie, but some scientists do? 

Ron
One of the things I learned from your book was the off-label use of drugs and maybe in our next segment, when I have you back, I'll ask you about that. But unfortunately, we're up against our break.  

Ed’s Questions: Segment Three
And we are back with Dr. Mary Ruwart. Her book, which we highly recommend, Death by Regulation: How We Were Robbed of the Golden Age of Health, and How We Can Reclaim It, is on sale at Amazon and other book places. Please go out and give that a read. It's a great work. And I really think that most people really will enjoy it. Mary, I wanted to talk a little bit about the libertarian policy aspects of this. For those listeners who don't know, Mary, you were once our vice presidential nominee for the Libertarian Party, back in, what 1980? 

Ed
Oh, you never got the nomination. Okay, so I have my history wrong there. Thank you for the correction. But I voted for you. Ron talked a little about this, and you mentioned that giving [the vaccine] to healthcare workers is probably the best option. Should government mandate that though, or how should we decide who gets the vaccine, and when? 

Ed
And then you get into private accommodations, could a hotel chain say that you have to produce your vaccine card before you stay at a particular hotel, or even a supermarket say you have to show that you've been vaccinated before you come into the supermarket? We would say libertarian-wise, why sure. But then that gets to a public accommodation issue. So this intersection of rights again, we get back to the baker problem. 

Ed
Ron, which was the airline that put the insurance as part of its fare [Emirates]. They created an insurance that if you fly on their plane and you get COVID for any reason, they will take care of your medical bills, which is a really interesting incentive to have people come and fly. So a great libertarian solution. On the distribution, I think we can all we probably agree that healthcare workers first is the best way to go. But there is a question of do you then go to elderly the best option? Or do you go to younger folks to try to build up the herd immunity quicker so that there's less distribution? It isn't that clear cut, is it? 

Ed
Interesting. So I did not realize that. So it may even be a case that even if they haven't tested it extensively enough to be able to know that with regard to the elderly population. Really? 

Ed
It was interesting, the flu shot is 60-70% efficacy and the Coronavirus [vaccine], at least in the initial trials, is somewhere between 90% and 95%. Which leads me to another question. They tested this, the double Jab, let's call it. It's the stick and then a booster two weeks later, I believe. But I think it was the Moderna trial, they showed that there's a fairly high efficacy with just one jab, almost as high as the flu vaccine. So then the ethical question becomes is should we double jab people, or do you get it out to the maximum number of people? This is yet another question that's not, in my mind, clear cut. 

Ed
Question, just quickly going back to the CDC and FDA and your grade of F, which I agree with you wholeheartedly on. With your understanding of those organizations, and I'm not trying to be an apologist for any administration, would it have been significantly different if there was somebody else in the White House? 

Ed
Sure. But my point is, these are bureaucracies that, regardless of who sits in the White House, are going to behave in a similar fashion. 

Ed
Mary, I'm going to go a little bit over in this segment, but I wanted to ask you this question quickly. As I mentioned, Ronald Bailey was on the show about two to three months ago [Episode #307]. And one of the things that he said, based on this Moderna technology, he thought that it is possible that what we are experiencing will be the last pandemic because of the technology that's in place. So in 30 seconds, your thoughts on that? 

Ed
All right, well, Mary, Ron's going to take you the rest of the way home. Thank you once again for appearing on the show. We'll have you back in the future, perhaps, to talk about this in six months to see where we are at that point.  

Ron’s Questions: Segment Four
Welcome back, everybody. We're here getting a medical degree from Dr. Mary, Ruwart. And, Mary, I wanted to ask you, I've read so much conflicting information from the World Health Organization, from the CDC’s own studies, where do you come down on [face] masks? 

Ron
There seems to be a moral hazard, or a Peltzman Effect, that I've got this mask, so I'm 100% safe. And that's not the case, is it?  

Ron
Don't surgeons change their masks every hour or so? 

Ron
I assume you're a free-trader, being a libertarian, as are myself and Ed. Are you worried that China produces so many of our drugs and the ingredients that go into drugs? We hear percentages like 90% of drugs come out of China, which I know is not true, but in general, do you worry about that? 

Ron
What's your assessment of the COVID task force? Dr. Fauci, Dr. Birx, all the others. They seem to contradict themselves, overall what's your assessment?

Ron
Last time you were on [Episode #192], I didn't get a chance to ask you this. But there was that compassionate use waiver that the FDA used to give? Are you encouraged now that 38 states that allow right to try? [It’s actually national now, every state allows right to try]. 

Ron
It also amazed me that Britain got the vaccine jabs quicker than we did. Does that tell you something about its process? 

Ron
Mary, thank you so much. This has been wonderful. We really appreciate you giving us your perspective on things, you definitely know this stuff really well. So thank you. And Ed, what do we have coming up next time we meet? 

Ed
Next week we're going to have replay of our Business Lessons from A Christmas Carol, and on January 1st, we are re-running our show with the great Walter Williams. And then January 8, we'll be back with a live show with Kevin Williamson of National Review.


Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #320: Interview with Peter Robinson

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Ron and Ed welcomed Peter Robinson, host of the Hoover Institution's show Uncommon Knowledge. This show (Uncommon Knowledge) is among Ron and Ed's top listens, but it is Peter's own work about which they talked. Most famously, Peter authored the speech given by Ronald Reagan where he implored, "Mr. Gorbachev, tear down this wall!"

Ron’s Questions: Segment One
Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by sage, transforming the way people think and work so that organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we are talking to living history. We have President Ronald Reagan's speechwriter, Peter Robinson, with us. Hey, Ed, how's it going? 

Ed Kless
Ron, I am so excited about this. I have been looking forward to this day since we booked Peter about a month ago. And even though my monitor broke today, my computer monitor, I am still happy guy. That's how good this is going to be. 

Ron Baker
I've been really excited about this since we were able to book him, but let me just read his bio. Peter Robinson is the Murdoch Distinguished Policy Fellow at the Hoover Institution, and hosts Hoover's video series program and podcast on Uncommon Knowledge. In 1979, he graduated from Dartmouth College, where he majored in English. Then he went on to study politics, philosophy, and economics at Oxford University, from which he graduated in 1982. He's also got a Stanford MBA, which we'll talk to him about. He served six years in the White House from 1982 to 1988, for both Vice President George Bush and President Ronald Reagan. He's the author of three books, two of which we'll probably focus on today. Peter Robinson, welcome to The Soul of Enterprise. 

Peter Robinson
Thank you. My pleasure. My pleasure. So far, so far.

Ron Baker 
Okay. Well, we'll see if you feel that way at the end of the hour, but we are just thrilled to have you on. I've been dying to be able to chat with you. You were born in 1957. 

Peter Robinson
Oh, stop. I know, I know. All that buttering me up. And now the knife, all right. 

Ron Baker
At 25 years old, you're in the White House. How does a kid from Vestal, New York, get to the White House at age 25? 

Peter Robinson 
On a fluke, of course. Let me see if I can compress, there's a certain amount of background you need to have to make sense of it. But I'll compress it as best I can. Graduate from high school, go to Dartmouth College, which you mentioned. And then I studied at Oxford. And then the bit that you left out, which I left out—you were reading a bio which I composed—but you've asked, so I'll tell you. After I finished my work at Oxford, I stayed there for a year to write a novel. And the novel turned out to be so bad that even I couldn't read it. So I was broke. I mean, I was really broke. I hadn't paid my final bills at Oxford. And, what was his name, the steward was Colonel somebody, I started getting very nasty letters from Colonel whatever his name was. And I was staying in a 500 year old cottage, the plumbing was 500 years old at least, I'm sure. And that cost me five pounds a week and I could barely afford that. Alright, so I wrote letters to people who I thought might be able to give me leads on a job. And the only person as I recall, certainly most people didn't reply, but Bill Buckley replied, and I can't claim to have known him well. But he always paid attention to student journalism. And I'd written a few pieces in the Dartmouth newspaper that had caught Mr. Buckley's attention as he was to me then, but he eventually became Bill. He wrote to me and said, You like politics, you like writing, go to Washington—this is 1982—and see my son, Christopher Buckley, who was then a writer for George HW Bush, the Vice President. Christopher may be able to find you a job in the still new Reagan Administration. All right. I flew back to Washington. I did present myself to Christopher. And what I didn't know, and Bill I don't think knew when he wrote the letter, Christopher announced to me that he was leaving the job in two weeks, and that his replacement had just fallen through. And he said while you're in the building, go downstairs. This is the old Executive Office Building. Go downstairs and see Tony Dolan. Tony Dolan was then the chief speechwriter to the President. And while I was talking to Tony, the campaign manager for Lou Lehrman, who was running for Governor of New York against Mario Cuomo, called to ask Tony if he could recommend a speech writer. So Tony and Christopher, good friends, conspired, and effectively what they did was put together a kind of fraternity prank. Christopher told the Bush people that he'd found the perfect replacement, me, but that they better move fast because the Lehrman campaign wanted me, and Tony told the Lehrman campaign they had to move fast, because the Vice President's office was going to hire me. Two weeks followed. The Lehrman campaign flew me to New York three times, I was in and out of the White House for interviews with the Bush staff. I got offers from both. I thought Lou Lehrman might lose in November, which was only a few months away. But George Bush at least is safe until 1984. That's two years. So for reasons of job security, I took the job with the Vice President. Did anybody ask for a writing sample? No. Did anybody ask if I had ever even written a speech? No. Both sides assumed that the other had performed the due diligence. And that was really lucky because I had never written a speech in my life. And that is how I ended up in the White House at the age of 25. And may I say? I ordinarily would wish you a large listening audience. But I'm hoping not too many people are listening right now.

Ron Baker
That's an awesome story. And then in the first year, you write over 150 speeches? 

Peter Robinson
Well, yes, but they were, let's put, let's put it this way. The volume was such that I typed most of those speeches. 

Ron Baker
Well, in your book, How Ronald Reagan Changed My Life, which came out 2003. You say the book is not a memoir, it's a primer. You document ten life lessons you learned from Reagan. I don't want to go through them all, because I want people to read the book. But his idea on the Cold War, Peter, I've heard the story a lot, that his idea was “We win, and they lose.” He had that way of taking a complex issue and making it simple. But you analyze this in a way I've never heard before. You said, “actors get used to the idea of alternative endings.” And I just thought that was brilliant.

Peter Robinson
Well, it was Reagan who was brilliant. The premise of the book, it's not a speechwriters memoir of the White House. I was so young when I got there. And this huge figure of Ronald Reagan, I was young, and there were all kinds of ways in which I took his impression. And, I was still figuring out how you did it, how you made a career, so I studied him, I really did study him. And so it was a very, very important part of his own formation, that he was a movie actor Early on in the industry. He moved to Los Angeles and got a contract as an actor in the 1930s. And in his first three years, this is in the book, I can't recall the number now, but was something like in the first three years, he made over 20 pictures. This is long before television, and they were turning out pictures. The President, I heard him say several times, “They didn't want them good. They wanted them Thursday.” He was under deadline. And it was often the case in those days, that the writers who were often a bungalow on their own working on the script, would get behind the shooting. And you get the actors and the crew on the set. And it's expensive, the clock is running. And if you don't have a script, and some of the actors were able to improvise, and Reagan had developed a reputation for being able to imagine the next, having the shot up from the script the day before. And he would he could imagine the dialogue that would come next, the action that would come next. And they could begin shooting with Reagan improvising. Alright. So and of course, when you're in that profession, in that business, you might test a movie in those days, they weren't testing all of them, but you might test a movie and the executives would say now the ending is too much of a downer, give it a new ending. And the ability just to think this, my conclusion was that Reagan developed partly because of his movie acting, he developed a really deep understanding of the sheer open-endedness of life. And so, he becomes a conservative in the 1960s, he becomes President in the 80s and throughout this period, thinking about the Cold War is calcifying, and the intellectuals have concluded—it’s a strange thing when you think about it, but nobody did think about it—the intellectuals had concluded the Kissinger/Nixon point of view that the American position was growing weaker. And that the best we could do, we were playing from a weaker and weaker hand, we'd have to make concessions. The bold stroke of the opening to China from Nixon’s and Kissinger’s point of view, we needed China. We couldn't handle the Soviets on our own anymore. And even conservatives, Jean-Francois Revel published a book in the 80s called How Democracies Perish. Whittaker Chambers, this great glowing, luminous figure among conservatives, who wrote the magnificent book Witness, he writes himself in that book, that when he left the Communist Party, to become—not to join another political party—but to become an anti-communist, he did so with the consciousness that he was leaving the winning side to join the losing side. And so, what's so strange about this is that nobody can tell you when they get up in the morning exactly what's going to happen in the course of the day. But intellectuals, even on the right, had decided they knew how the century was going to end that, that the history was moving on this. And Ronald Reagan comes along and says, “No, no, I don't see why stories can have different endings. Life is open ended. History is open ended.” I also think, I couldn't prove this, but I also suspect, when he was a kid, a high school kid, he was a lifeguard on a river there, they roped off a portion of the river, the Rock River as I recall. And over the course of several summers, he pulled, and he was proud of it, he knew the number, it was 77 people he pulled out of the water. So he prevented some 77 drownings. Well, there's something about that, you pull a floundering swimmer out of the water, and at that moment, you've changed history, you've changed that life, that person's history. And you do that 77 times, and you get the idea you can make a happy ending, you can intervene in history, you can intervene in events, and they can come out differently from the way that the currents of the river, left untouched, might take a drowning swimmer down, the currents of history that the intellectuals thought they understood. And Reagan just comes along with this Midwestern common sense. You know, I think we can handle this attitude. So that's the long answer to a very simple question. But there was something really deep in him that understood the contingency of life, the open-endedness of individual lives, but also of history itself. It's not pre-determined.

Ron Baker
It's a wonderful explanation, and I never have heard it like that before. And of course, he went on, as Margaret Thatcher said, “Ronald Reagan won the Cold War without firing a shot.” You trace that victory in the Cold War to four speeches. I'm just setting up Ed here because we're almost at our breakpoint, but… 

Peter Robinson
One answer per segment…I’ll shorten up my answers… 

Ron Baker
No, no, we'll just hold you over for our bonus episode. You give the British Parliament speech that he delivered in 1982 where he said, basically, Marxism was on the ash heap of history. And you say that's where he announced his strategy. And the Evil Empire speech in March of 83, where he made the moral case for pursuing the strategy. And then the Berlin Wall speech in 87, which of course you are responsible for writing, which pressed his advantage, and then of course, the Moscow State University speech written, I think, by your best friend, Joshua Gilder [George Gilder’s cousin], and of course that was his victory speech. 

Peter Robinson
Yeah.  

Ron Baker
Now, we want to hear the story—I know you're probably sick of telling it—but I'm sure Ed is going to ask you about the story of the Berlin Wall speech, which I think is great. So, I just set you up for that in the next segment. But unfortunately, we're up against our first break.  

Ed’s Questions: Segment Two
And we are back on The Soul of Enterprise with Peter Robinson, author of the “Mr. Gorbachev, tear down this Wall” speech. And Peter, I grew up during that time, I had graduated high school in 1984, and was in college when that speech was made. And I just have to ask you, tell us the story of how that speech came about. 

Peter Robinson
I'm happy to. Spring of 1987, April 1987, we speech writers were told that an event had been added to the President's calendar. He was already scheduled in June to visit Italy, he’s going to go to Rome to see the Pope and see the President of Italy. Then there was a Venice Economic Summit, which was going to take several days. And at the request of the West German government, the staff added a stop in West Berlin to the trip. So after Venice, he'd fly to West Berlin, as we called it in those days, West Berlin for about half a day and then fly back to Washington. Berlin was celebrating its 700th anniversary. It was celebrating its centennial anniversary. And the Queen of England had already visited. Gorbachev was going to visit and that was the point. The West German government, if the leader of the Soviet Union was going to visit East Berlin, which Gorbachev was going to do, then the [Helmut] Kohl government wanted the President of the United States to visit West Berlin. Okay. So I was told where the President would stand, that the speech would last about half an hour, and that he'd have an audience of in the range of 10,000 to 40,000 people. And given the setting, he should talk about foreign policy. Period. That was the direction I got. I flew with the American advanced team, people who are going to be making press arrangements, coordinating matters of security with the West Germans and so forth. I flew with that team to West Berlin, saw the site where the President would speak, paid a visit on the ranking American diplomat in West Berlin, got a helicopter ride over the Berlin Wall. And then that evening, broke away from the American party and got in a cab and went out to a suburb of West Berlin. Where some West Germans put on a dinner party, 15 or so people, for me. The host and hostess, and I had never met, but Dieter Elts was his name. He just died last year. Dieter just finished a career at the World Bank in Washington and retired back to Germany. We had friends in common and our Washington friend, our common friend, got in touch and said could you host Robinson so he can meet some Berliners. My problem was that when I saw the site where the President would speak, I just couldn't imagine coming up with material that would be equal to the Wall, equal to the weight of history. I stood on an observation platform in those days and looked over the Wall into East Berlin, where the buildings were decrepit, the colors seem to be leached out of the scene. Gray concrete, you could still see a great deal of World War II damage, shell marks on buildings, soldiers marching back and forth, dog runs. I just thought what, what can I write? And the ranking American diplomat reminded me that West Berlin was a left leaning city, a couple of major universities there, you know how far to the left universities are. Since West Berlin is entirely surrounded by East Germany, they're very sensitive to the subtlety and nuance required in East-West relations and so forth. So at the dinner party that evening when I was with West Berliners, I told them this. And I said, when I flew over the Wall, I can't see how you could get used to it. The ranking diplomat here [told me], “Don't make a big deal out of the Wall because they've all gotten used to it by now.” And there was silence. And I thought I committed a gaffe, just to kind of gaffe that the diplomat wanted the President to avoid. And then one man raised his arm and pointed. And he said, “My sister lives just a few kilometers in that direction. And I haven't seen her in more than 20 years. How do you think we feel about this Wall?” And then they went around the room. And every person told a story about the Wall. They hadn't gotten used to it, they'd stopped talking about it. But if you asked, they would tell you. And our hostess, Ingeborg Elts, a lovely woman, she died three or four years ago. But she became quite angry, and she said, “If this man Gorbachev is serious with this talk, Glasnost, Perestroika, he can prove it by coming here and getting rid of that Wall.” And I put that in my notebook. And I knew immediately, instantly, that if the President had heard that comment, if he'd been there, he would have responded to that. The simplicity, the decency, the power of it. And, of course, I also lunged at the line, the remark, because I was a 30 year old speechwriter in a lot of trouble. I just couldn't figure out what material, but when she said that I thought, “That's it. That's it. That's it.” So I went back to Washington and drafted a speech around this line, this idea. And Khatami, Griscom was the Director of Communications. He liked the speech. And Tony Dolan, the chief speechwriter, Tony Dolan, Tommy Griscom, and I, pulled a fast one, and persuaded the staff secretary to give the speech to the President on a Friday so he could review it that weekend at Camp David, on the ground that the President had a lot of speeches coming up, and he ought to be given a chance to get his reading in early. The invariable rule in the Reagan White House was that speeches went out to staffing before they went to the President. And we got this speech to the President first. And on the following Monday we had a meeting in the Oval Office, and we're talking about a number of speeches, Josh Gilder wrote a speech for the President to deliver to the Pope. And the President was alive. He had quite a lot of comments on that, more material he wanted to add. Then we got to my speech. And he said, “Well, that was a good draft. That's a fine speech.” I wanted more from him, we always wanted more from him. And so I said, “Mr. President, I learned when I was in West Berlin that they'll hear you on the other side of the Wall by radio, maybe even as far east, depending on weather conditions, as Moscow. Is there anything you'd like to say to the people on the Communist side of the Wall? And the President, this is one of those, I can still play this one in my mind. The President thought for a moment and he said, “Well, there's that passage about tearing down the Wall. That's what I want to say to them. That Wall has to come down.” And I was disappointed because we hadn't gotten fresh material. But that just shows what a fool I was. The speech went out to staffing. From the day it went out to staffing until the President delivered, which was about three weeks, the State Department opposed it, The National Security Council opposed it, the diplomat in Berlin opposed it. They submit draft after draft, as I recall, seven alternative drafts, different pretexts, but from each the line “tear down this Wall” was missing. Then the traveling party left for Italy, I was not part of the traveling party. So this piece, what I've told you so far is firsthand. Now I'm telling you what I heard by Tony Dolan told me the story and Ken Duberstein, the Deputy Chief of Staff. The State Department continues to object. Now they're in Italy. And Ken Duberstein decides he has no choice but to take the decision—it’s bad staffing if you have to make your principal make the same decision twice, right—so you try to resist that, that's a waste. The most precious resource in the federal government is the time of the President of the United States. But Ken decided he really had no choice. So he sat the President down in some Italian garden, he tells me, and described that the State Department said the speech was naive, it would raise false expectations, it would put Gorbachev in a tight position in the Politburo, and so forth. And he had the President reread the central passage, and then they talked about it for a while. And Ken said, and this moment came where the President got that—you guys are too young to remember this—twinkle in his eye.

And the President said, “Now, Ken I'm the President, aren't I?”

“Yes, sir. We're clear about that much.” 

“So I get to decide if that line stays in?”

“Yes, sir. It is your decision.”

“Well, then it stays in.”

As Air Force One left Venice to fly to Berlin, the fax machine clicked into action and the State Department sent in another alternative draft. And Ken said, Ken was in the limousine on the way to the Wall in West Berlin with the President, who leaned over and slapped Ken on the knee and said, “The boys at State are going to kill me for this. But it's the right thing to do.” So, that's the story of that speech. You gave me credit for the speech, which in some superficial, narrow sense, I'm grateful. And thank you. It's true, but not deeply true. The deep truth is that that speech belonged to Ronald Reagan. I'd been formed by his thinking, by his speaking style. I was in Berlin to listen for material that would appeal to him. I wrote that speech for him. I worked for Vice President George HW Bush, I knew him well, he was a magnificent man. But I would never have written that for George Bush, and George Bush would never have delivered it. When I wrote speeches for him, when he was Vice President, you'd hand him a speech on foreign policy, he'd take it and say thank you. And then look at you without even looking at the speech, he’d look at you and say, “Now you've cleared this with State, right?” And Ronald Reagan didn't actually care too much what State had to say if he disagreed. So I would never have written it for anybody else. And nobody else would have delivered that speech. That speech belongs to Ronald Reagan. 

Ed Kless 
Well, thank you for that. It's a fantastic, marvelous story. And it is really the iconic line of Reagan's presidency, which is obviously pretty intense. 

Peter Robinson
Now, see, I just gave Reagan credit, as is true. At the same time, Oh, if only I got royalties. 

Ed Kless
I mean, the T-shirts alone. We’re a little bit over but I do want to ask you this question. Do you think that had the Berlin Wall not come down 2.5 years or so after [the speech], would it still have its place? 

Peter Robinson
What, the speech? 

Ed Kless
Yeah, that line.  

Peter Robinson
Not a chance. Not a chance. When he gave that speech, it had a certain amount of impact. The Berlin press paid attention to it. It was interesting, because it was the kind of division that we've gotten used to during four years of Donald Trump. The highbrow press hated it. And the lowbrow populist press loved it. In Germany, as in this country, incidentally, The New York Times of course, huffed and puffed and denounced it. And the New York Post, as I recall, there were the more populist press in this country liked it, but it was, it was a big speech, but it was just a big speech. It disappeared after a couple of weeks. It was when the Wall came down, that the speech—I don't know how else to put it, it seemed retrospectively prophetic, if you see what I mean. That speech gets remembered because Ronald Reagan was right. He was right. You can't ease up on communism. You can't go part way, you have to take this Wall down. That's the interior dynamic of freedom. All right, so no, I don't think we would remember it at all if that Wall hadn't come down.

Ed Kless
All right, well, we are up against our next break.  

Ron’s Questions: Segment Three
Well, welcome back, everybody. We're here with Peter Robinson. And Peter, what a great story. Wow, that was chilling. Just because, like we said, it's living history. I just want to ask you really quick, you went back to Berlin for the 15th anniversary of that speech and did a Fox documentary, I believe, with Tony Snow. And then they recreated that dinner party that you had? What was it like to see East Berlin at that point?  

Peter Robinson
Of course it was good to see the people who had helped me, and in particular, Ingeborg Elts, we went back to their house, it was very good to see them. Tony Snow, the late Tony Snow, what a sweet man, and a good journalist, I do miss him, too. Tony said, “Come on. Let's go.” We finished shooting at one point, and he had been back several times. I had never been back. So what you had in my mind was this vivid image, it's still vivid. To me this is a problem. Even young Germans don't, it's almost impossible to explain what it felt like to be in West Berlin, a modern city, lights, traffic, action, people well dressed, with a wall all the way around. You could forget about it for a moment and then you'd be walking down the street, you turn and at the end of that alley, there would be a wall. All right. So Tony, and Tony had been there before. And we walked through the Brandenburg Gate, which 15 years before had been walled off. It had been on the other side of the wall. And we walked up Unter den Linden, “under the linden trees,” which you can think of it as a German version of the Champs Elysées, or the Mall in London. It was the central historic thoroughfare of Berlin, with great historic buildings, which now had been restored. It was so thrilling. I'd seen them only from a distance and they were crumbling. Now they've been restored. And Tony, Tony knew his Berlin history. And we went to, as I recall, it was the headquarters, it was either the old Soviet embassy—the Soviet Union no longer existed—or it was the headquarters of the East German Communist Party, it was some commie building. And we got there, and it was a Rolls Royce dealership. I thought that was almost too much of a triumph for capitalism, but it was just so thrilling to be in this place that had been walled off and dark. And honestly, this sounds so, I don't know, corny or hokey, but when I was there in 1987, when I looked at, stood on the observation deck, and looked into East Berlin, the only thing I can compare it to, with regard to what it may feel like was, it was as if I were Frodo getting my first glimpse into Mordor. It just felt dark. It almost felt as if there was a kind of malign presence there. It was an evil empire, to coin a term, it really did feel that way. And it was gone. It was gone.

Ron Baker
It reminds me of what Nixon said about communism. He said, “The color of communism is not red, it's gray.” Speaking of the Rolls Royce dealership, there's a communist Museum in Prague. And it tells the whole story, and it's above a McDonald's. So beautiful blending of capitalism and communism. 

Peter Robinson
Oh, and there was a moment, this has got to be available online someplace. But there's a moment after the fall of the Berlin Wall, after the fall of the Soviet Union. I think it was the back page of some expensive advertising site. I think it was the whole back page of Vanity Fair. And there's Gorbachev in the back of a limousine with a fancy suitcase or briefcase and it's an ad for Louis Vuitton. The last General Secretary of the Soviet Union with a Louis Vuitton briefcase. 

Ron Baker
Didn't he sell his birthmark to a vodka distributor? It cracked me up. On Gorbachev, I wanted to ask you this, because in the book you cite an interview that he did. And he said, he was speaking of Ronald Reagan: “He was an authentic person and a great person. If someone else had been in this place, I don't know if what happened would have happened.” Did Reagan win the Cold War? I mean, Gorbachev gets a lot of credit from the left. Where do you come down.  

Peter Robinson
Here's where I come down. This goes back to what we were talking about earlier, the contingency of history. Had someone other than Reagan, or just click through the people who might have been President in place of Reagan. Suppose Jimmy Carter had won. Suppose Bob Dole, or Howard Baker, or George HW Bush been President, had defeated Reagan in the Republican primary. I can't project from what we know about any of those men, that they would have stood up to the Soviets, and taken the heat for increasing the defense budget, cutting taxes to revive this economy, putting the Pershing missiles in place in 1983, delivering speech after speech after speech that sounded like trumpet blasts. Would any of them have done that? I can't believe it. I don't think they would have. Did Reagan win the Cold War by himself? You cannot describe the end of the Cold War without [Pope] John Paul II, or Margaret Thatcher, or indeed Mikhail Gorbachev. I think I might also add Lech Walesa and Vaclav Havel. But I do think you can say there were ten people without whom things would have been different. No Margaret Thatcher fracturing of the NATO coalition. No Ronald Reagan continuation of detente. No John Paul II, no demonstration of the illegitimacy of communism in Eastern Europe, even three decades after imposing communist regimes. No Gorbachev, it might not have ended peacefully. I wonder, I keep going back and forth, not that anybody cares about it at this stage, But how much credit does Gorbachev deserve? When really what everybody hails him for doing is behaving like a decent human being. And not calling the troops, the Red Army out of the barracks in Eastern Europe. Now, they did call out the Red Army in 1956 and put down the Hungarian uprising, they did it again, the tanks rolled into Prague in 1968. And Gorbachev could have done it. The Red Army had a massive presence throughout Eastern Europe, he could have crushed the revolutions of 1989. And he didn't. Well, alright, we should be grateful to him for that, I suppose. But what he did do is behave like a decent human being. He behaved like someone other than a communist, other than a doctrinaire communist. In any event, without Gorbachev it's hard…if Andropov had not died when he did, if Chernenko or Brezhnev were still alive, this would not have ended peacefully.

Ron Baker
And of course, Gorbachev wanted to save communism. I mean, he was a diehard believer.  

Peter Robinson
Correct. He was. The way I think of it is that Gorbachev was the last true believer, he was the last real communist. And in some ways, he was a bit of a throwback. Brezhnev, Chernenko, and Andropov, they all understood the need for the iron fist. Gorbachev was kind of strangely naive, he believed that communism itself was so appealing, that people would choose communism, even if you remove the iron fist. And of course that's nonsense. Nonsense. 

Ron Baker
Awesome. Well, Peter, I've only got about a minute with you, but you wrote a book called Snapshots from Hell: The Making of an MBA about your time at Stanford, published in 1994. As a CPA, I get a lot of questions about “Should I get a CPA or an MBA?” First thing I do is say, go get this book. I've recommended this book to so many people, I think we've both prevented a lot of MBAs as a result. You write at the end of that book: “The reader will have to check in with me again in twenty or so years to learn how my classmates and I stand.” It's been 26 years. Do you regret going to Stanford to get an MBA? Or was it a worthwhile experience? 

Peter Robinson
I have by last count, I have five classmates who are billionaires. And what I regret is not having gotten to know them much, much better as undergraduates. My business degree didn't really take, and yet at the same time, do I regret it? Actually, I don't regret it. You know, it's impossible to undo bits of your life. And here I made good friends. I made friends who are still my friends during that crazy MBA experience. An MBA is only useful for particular kinds of people. And I'm not sure I was one of those kinds of people. In fact, I'm pretty damn sure I wasn't. 

Ron Baker 
Is that what landed you at Hoover Institution? That you were out there and made connections? 

Peter Robinson 
Yes, Ronald Reagan said to me, when I was leaving the White House, in my little farewell meeting, he said, “Now, where are you going?” And I told him, “Stanford Business School.” And he said, “Well, the faculty out there is a little left-leaning. But you get in touch with my friend, Milton Friedman. And so I show up at Stanford Business School, Milton Friedman was across the street at the Hoover Institution, and I thought, how many times am I going to get an introduction from a President to a Nobel Prize winner? So I did present myself to Milton Friedman, who—I don't know if you ever knew him—he was a delight. He could be quite rough on you if he thought you were mistaken intellectually. But he was a delightful, warm, generous, wonderful man. And he kind of introduced me around Hoover. So later, I was invited to return to Hoover. I suppose that's the advantage of my MBA, that I happen to run into people across the street. I got to know people across the street at Hoover. 

Ron Baker
I met MIlton and his wife, Rose, once at a speech they gave, and we've had his son on, David Friedman, he was a delight. But unfortunately, Peter, I'm out of time and if I go anymore, Ed's going to kill me.  

Ed’s Questions: Segment Four
And we are back on The Soul of Enterprise with Peter Robinson. And Peter, it's not often that I get chills doing this show. It has happened on a couple of occasions. But your story is certainly one of them. But one of the times when I've got chills listening to one of your shows on Uncommon Knowledge was your more recent interview with Jimmy Lai. Our listeners have heard Ron and I talk about Jimmy and his experiences, and coming to Hong Kong when he was a boy and getting a bar of chocolate and it changing his life completely. What are your thoughts on the situation, both with Jimmy specifically, but also with what's going on with Hong Kong? And what maybe the US should do about it? 

Peter Robinson
Yeah. You guys can put a link up to the show, perhaps the most recent interview I did with him. So Jimmy Lai is a great figure. He is. I had to have had the feeling when I was talking to him, that in one way or another, he's the kind of man that George Washington must have been. I'm talking about a Chinese man, of course, who speaks heavily accented English. I don't mean that he had the bearing of Washington. I mean he had the courage of Washington, or St. Thomas Moore, a similar kind of person. So Jimmy Lai, a billionaire, and he has British citizenship. And he won't leave Hong Kong. He just said, “This city means everything to me, it gave me the life that I have. I'm not leaving.” When all his, I shouldn't say all his friends, but I know many of his American friends, and they're just desperate for him to get out of there. Which would be easy for him to do. He's one of these rich Chinese who has houses in other places. He will not leave. And so in the last interview, which I did this past summer, I said, “Well, Jimmy, what? They've detained you a couple of times already, this is not going well.” And he said, and he referred to his faith—he’s a convert to Catholicism, so he's a Christian—and he said, “Well, it could be that this is what is. This is what I need for the good of my soul. Maybe I need to go to prison. Maybe I need to suffer for the good of my soul.” Unbelievable for a man to say that. And now of course they've carted him off. He is in prison. What do I think about Hong Kong? I don't know what kind of trades or sanctions might be useful. I was persuaded by Jimmy, whom I interviewed maybe a year ago, and then I interviewed him again this past summer. But a year ago, he made the argument that the mainland Chinese, the communist Chinese, were going to leave Hong Kong alone because they needed it too badly. Something like 60% of foreign investment flowing into China flows through Hong Kong, because investors from Europe and this country want to be able to understand that they've got the rule of law on their side, they'll be able to remove their profits, and so forth. And so the Chinese need Hong Kong, and they'll be very careful, any moves will be incremental. And that was just wrong. I don't believe the analysis was incorrect. As far as I can tell, the Chinese are going to damage themselves. But the horrible power dynamic that seems to power communism, and it seems to be driving them, they can't take dissent. They can't handle that. They can't handle the truth. They can't permit the truth. So I just remember that I did an interview with Nathan Sharansky, who was a refusenik in the Soviet Union. And why did the Soviets, that he said he tried until he was 20, or 21, to be a good Soviet citizen. And here's what it meant. It meant that you said what you knew they wanted to hear. You read the books that they permitted you to read, you lead your life the way you knew they wanted you to lead your life. And at the same time, you knew that it was all a lie. So the question is, why do they insist on this? And the answer is because they need a humiliated, broken population. And the Chinese seem to have fallen into the same, so this to me, one thing that we're finding out here—you might want at some point, you might want to invite Stephen Kotkin on the show, Stephen Kotkin is the Princeton historian. He's working on the third and final volume of what will surely be the definitive biography of Stalin. Stephen came out here to Berkeley, and he began visiting the Hoover Institution as a young graduate student. So we're talking about a man who's 60ish now. So for four decades Stephen has been poring over the archives of the Soviet Union and communist documents, at Hoover and other places, it started at Hoover. He probably knows more, and has read more archives, meetings, notes on meetings from the Politburo and  and so forth, than any person alive, including Russians. And I once said to him, “Stephen, what's the central finding? What's the one thing that you learn from poring over those archives?” and Steven replied immediately, “That they were communists. They were communists, they really believed it. And even when they had nothing to prove to each other, even when they were in private conversation with each other, the members of the Politburo talk like communists, they used Marxist-Leninist terms, they use that kind of analysis.” And as far as I can tell, for some years now, we in the United States have permitted ourselves to believe that the people running China aren't really communists, they don't really believe that stuff. What they believe in is markets and economic growth. And what that means is that eventually they'll move in our direction politically as well. They'll permit greater political freedoms. They're communists, that's what we're finding out now. They really are communists.

Ed Kless
One minute left, and a totally unfair question to wrap it up. What would Reagan do? 

Peter Robinson
Tell the truth. He would tell the truth. I think that's what I'm struck by every speech you give. Someone said, well, did the Berlin Wall speech make any difference? The answer is, I don't know. It's really hard to say. But think of a speech that we know is a great speech. Take the Gettysburg Address. Did it make any difference? Beats me, you can't prove it, right? You can't say GDP ticked up, you can't prove it. Every speech, even big speeches, it's a message in a bottle. You give a speech, and you hope that human beings hear it and respond in some way. And so what I learned from Ronald Reagan is that even when you're President of the United States, and you seem to command the attention of all the media, giving a speech is an act of faith. It's an act of hope. And in dealing with the Soviets in those days, you just didn't. But he did it all the same he, and John Paul II, and Margaret Thatcher, you tell the truth. Why? Because it's the truth. And so that's what Reagan would do. He would tell the Chinese what they were like, he would tell them what they were. 

Ed Kless
Peter Robinson, thank you so much for appearing on The Soul of Enterprise. We hope you come back. I got through like only a short portion of the questions that I wanted to ask you. Thanks so much.


Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

This week was Bonus episode 320 - “Post-Peter, ACO Merch, and Fascism”. Here are some of the links we discussed:

Episode 319 - Interview with Robbie Kellman Baxter

robbie kellman baxter.jpg

This past week Ron and Ed welcomed Robbie Kellman Baxter, author of The Forever Transaction. We talked about, of course, SUBSCRIPTIONS! Robbie's customers include Netflix, the National Restaurant Association, and The Mail Newspapers in the UK, as well as dozens of Silicon Valley SaaS and consumer subscription companies.

A Bit More About Robbie
Robbie Kellman Baxter is best known as the creator of the popular business concept Membership Economy. She is the founder of Peninsula Strategies LLC, a management consulting firm, as well as the author of the bestselling book, "The Membership Economy: Find Your Superusers, Master the Forever Transaction & Build Recurring Revenue" . She coined the popular business term “Membership Economy", which is now being used by organizations and journalists around the country and beyond. Before starting Peninsula Strategies in 2001, Robbie served as a New York City Urban Fellow, a consultant at Booz Allen & Hamilton, and a Silicon Valley product marketer. She has an AB from Harvard College and an MBA from the Stanford Graduate School of Business.

Ed’s Questions: First Segment

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ed Kless with my friend and co-host, Ron Baker, and folks on today's show, we are thrilled to have with us Robbie Kellman Baxter. Hey, Ron, how's it going?

Ron: Good, Ed. I'm looking forward to this. I've read Robbie's books this year, so I've been marinating in her ideas.

Ed: Locked and loaded for today. I'm sure so let me let me bring her on. First. We'll get the Bio out of the way. Robby Kellman Baxter is a strategy consultant helping companies develop and optimize membership models and subscription pricing, has deep expertise in subscription-based and SAAS models, and the membership economy. She brings over 20 years of strategy, consulting and marketing expertise to Peninsula Strategies, her strategy consulting firm, focused on helping companies leverage the subscription model, the digital economy, and freemium, to build deeper relationships with customers. She is the author of The Membership Economy: Find Your Super Users, Master the Forever Transaction, and Build Recurring Revenue, 2015 [and, The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave, March 2020. Robbie coined the term “membership economy” and it is now being used by organizations and journalists around the world. Thanks so much for being with us today Robbie Kellman Baxter.

  • Let's start out with the basics. What's the membership economy?

  • So talk about that difference in your mind. What is the difference between having members versus just having customers?

  • I was reminded when I started hearing the term, there was a commercial, I believe in the 70s and 80s, for American Express, and the tagline was “membership has its privileges.” I'm sure you recall that. And that came to mind. And I think that's a great thing to keep in mind, right? Is, what are the privileges that you're developing? And you call it the difference between having the membership as a product versus membership as the mindset?

  • It is really loaded, but it's a good word. I think it's an important word. One of the things that Ron and I have talked about for years and years and years is that in order to make any change inside your organization, as Werner Earhart says, all transformation, all change is linguistic. So the language you use is very important. And it was funny, because earlier today I was talking to somebody who has a membership organization. And we came to this very same conclusion: you're treating your membership as a product, not as this notion of a relationship. And have you seen, I'm gonna kind of go sideways on this, Ryan Hamilton's appearance on the Stephen Colbert show, where he talks about trying to cancel his cancel his gym membership.

  • He's got a great line in the routine where he says “If you have to write a letter to cancel something in 2020, you're being bullied.”

  • And he said at the end, he says, “I actually had to walk by the gym to go to the CVS to buy the envelopes. But isn't that interesting, the other example that I've heard you use, Ron and I have used it, the Hotel California, the worst membership experience of all of our lives, especially if you grew up in the 70s, was the Columbia House Records, which was literally the Hotel California because I bought the Eagles album.

  • And they wouldn't let me, they kept sending me stuff. And, it's so funny that I think we've had to make this adjustment; they had some really good ideas. But what is it that we can do to adapt some of those great ideas that Columbia House and other places had, but make them with the Cancel button front and center?

  • It's horrible. So, is subscription membership a pricing tactic? Or is it a strategy?

  • So I’m curious, do you use the subscription membership model for all of your pricing? Like in the work that you do, I noticed that you do consulting, you obviously do coaching, which I would imagine is subscription?

  • The industry that I can come from, which is Sage, the organization that I work for. We sell accounting software. And this is one of the big conversations inside the organizations right now who used to sell what we call on-premises software, and then have now moved to Software as a Service. The software is now priced on subscription, but their services are not. And there is similar to your thing, a big-bang upfront, with this kind of ongoing thing. That said, I'm trying to coach my people to get past that and really look to see if there is a way that you can make this subscription and take the loss leader of the big-bang up front? So what are some of your thoughts on that?

  • I think that's very true, especially in the industry that I'm talking about, because nobody changes their accounting system because they think it would be fun, right? Hey, let's do this, that would be fun. We know that they're doing it because they're in a world of hurt someplace, like their current system is significantly deficient in some way. Because really, with accounting systems, and I hate to say this as someone who works for a company that does this, debits equal credits, all systems, ultimately is what those things can do. We are already up to our first break.

Ron’s Questions: Segment Two

  • Welcome back, everybody. We're here with Robbie Kellman Baxter, the author of The Membership Economy and The Forever Transaction. Robbie, on your Membership Economy book, you talk about the move from customer service to customer success. There seems to be a customer success department in a lot of subscription-based businesses. You also talk about how membership is an attitude, whereas subscription is more like a financial arrangement. Because with a membership, you're committed until you cancel, right? I mean, you have to actively break up to cancel. And Ed and I think about this in terms of “choice architecture,” and psychology. There's just something deeply different, whether you call it membership or subscription, about joining something, versus just entering into a transaction.

  • The peace of mind. And the convenience, like you say, I think they're completely undervalued. I'm a recovering CPA, and I work in the accounting, legal, advertising space with professional firms. And I'm trying to get them to move to this. And I realize that you're talking about this in the book, this all you can eat option, but like concierge doctors, or direct primary care doctors, I do think these firms could set up, hey, whatever you need, you're covered. Anything we’re capable of doing under our roof, you are covered. If you get audited, you know just like a doctor, whatever you need, stitches, broken leg, whatever, they'll do it, you're covered, and that just swaddles the customer in this peace of mind and convenience that they will pay dearly for.

  • We talked about, and I know you’ve spoke already at the Professional Pricing Society, Ed and I are faculty members there. So we've been teaching value pricing for years, and value pricing was all about, and you say this in one of the books, pricing the customer—it’s the airline model, your pricing each customer, not the seats. The customer, whether they are business or leisure, when did they buy their ticket, all those types of factors. And in the subscription model, what's different is your pricing the relationship. I think about the Porsche Drive program, I'm not subscribing to a car, I'm subscribing to Porsche. That's a big, big difference isn’t it?

  • And 80% of the Porsche Passport members are new to the brand, which is phenomenal. They did rebrand it, by the way. It's Porsche Drive, not passport. I'm bummed because I thought Passport was great marketing. One objection we get from firms, and I'm sure you hear this all the time, is what about that one-off service? You know, I think you call them Ala carte services? And I'm like, Okay, well, you could carve out and price that separately. But if you're constantly doing that, why can't you just bake it into the model?

  • That's just one of the main disadvantages of value pricing, pricing the customer. And at Professional Pricing Society, for a long time, we thought that that was the trend, you're going to have individual prices for each customer. But the membership economy kind of blows that up and says no, no, make it transparent. Make it Netflix, and just let people use what they need. They're not going to abuse it, maybe 2% might use 20% of your resources, but you can price for that. You can actuarially price the portfolio. That's the other thing I love about this model and spread that risk amongst all of your customers.

  • You said something about the airlines that I just love, you said that they're an excellent example of an electric fence rather than a magnet. I love that. Do you think with the airlines, will we see any major carriers like United move to a subscription option, where you just pay them 50 grand a year and they fly you anywhere you need to go?

  • Do you think they should?

  • We've got less than a minute, Robbie, but just real quick, do you think this is easier to do for a company that's really focused? I mean, I'm thinking the difference between Coke and Pepsi. Pepsi is involved in food, and fast food, and all this stuff. But Coke just does beverages? It's much easier if you're focused, isn't it?

  • It's easier to put guardrails and it's easier to bake in those ala carte one-offs, all of that type of thing. Well, this is great. There's so much more I want to ask you about these books, because I really enjoyed both of them. I think they're both really great, very thought provoking pieces of work. So congratulations, and I know that The Forever Transaction came out this year, right? I think this is cutting edge. This is bleeding edge stuff. And that's, that's how we know it's a great idea. It scares people, right? Anytime you're out there scaring people, you know you've got a great idea.  

Ed’s Questions: Segment Three

  • We are back with Robbie Kellman Baxter, author of The Membership Economy and The Forever Transaction. Robbie, I wanted to ask you about something that you said during an interview with Singularity University. You said, “In order to move to a subscription model, the company needs to have developed a competency in innovation.” And first of all, interesting verb tense. So that needs to have developed a competence in innovation, so is an innovative thinking style a prerequisite to the membership economy?

  • That's hysterical. One of the things I want to ask you about is, I know you've done some work with Netflix, and they are very tied into the fact that they have one choice. It's this, here's your choice, this is what you do. But I know that a lot of folks are saying, and when we teach value pricing, we have always talked about giving at least three choices to the customer. What is your thought with regard to subscription in regard to offering choices? And also, what have you learned about creating what we call fences between those choices, to make them optimized?

  • And what has been helpful with regard to more than one choice, about creating clear differentiation between those choices. One of the things that I see oftentimes is people don't have enough distinction between those choices, and I’m wondering if you had any thoughts or insights on that?

  • You brought up the all you can eat. In the Brazilian steak house, I'm always a fan of that the salad bar and the bread that they give you, which is absolutely delicious, that's just a diversionary tactic to get you not to have the meat. So avoid that. Don't let them distract you. I wanted to ask you about something that Tien Tzuo has written recently about, the author of the book Subscribed. He says that freemium is dead, and long live the free trial. Do you have any thoughts on that? Or, if you have that mindset now? Or are you still, freemium still has its place?

  • That's a great answer, and a great example. I love the way that you give the example of the meat, and all that, that was perfect. So I had a question. You talk a lot in your courses about ethics and trust being an important thing. And I'm going to put you on the spot here a little, I think. What about the ethics of the subscription model for, say, a pharmaceutical company? Should we be able to subscribe to say, Moderna, for early access to future vaccines?

  • Yes, I did. I only have one more minute with you. So I figured I had to go.

  • Sure. And the argument on the other side would be, is that if people are on a subscription, they're helping to fund future vaccine development.

  • I think that from the ethical side, my argument would be, well yeah I get early access, but I helped fund the development of the vaccine. Anyway, great answer. I know that was a sharp left, but I do really appreciate that. Yeah, it's a lot of fun to think about all of these different models.  

Ron’s Questions: Fourth Segment

  • Welcome back, everybody. We're here with Robbie Kellman, Baxter, author of The Forever Transaction. And Robbie, you wrote something in here that I absolutely love and I find very incredibly thought provoking, especially for one of our VeraSage colleagues, Tim Williams, who works in the marketing and advertising space, as a consultant. You say a forever promise is different from a brand promise. How so?

  • It goes all the way back to the relationship, doesn't it, there's just something about putting the relationship at the center of the business. And I know you talk about this as being more than just a pricing model. It is a business model change. I'm kind of a student of business models. And I've learned two things about them. At least two things change when there's a new business model, the pricing strategy changes, you know, we go from buying CDs to buying 99¢ cents a song, and now we're subscribing, right? But the other change that always happens, and I can't find a single solitary exception to this, maybe you know one. But the other thing that changes is your dashboard. Your KPIs are completely different. Airbnb has a different dashboard than hotels, and Uber has different dashboard then taxicab companies. And you say, some companies think of themselves as product companies, we all say we're customer based and relationship based. But our measurements don't reflect it. Our measurements track transactions. So how important is changing those measurements internally?

  • I think a lot of even a lot of accountants don't understand the income statement for subscription business with that rolling forward of the annual recurring revenue, and the calculation of customer lifetime value, and all of those things. This is all new, and GAAP doesn't deal with this very well. And so a lot of companies need some help thinking about the metrics, because we're so used to that transactional mindset.

  • We interviewed Joseph Pine, he's the author of The Experience Economy [Episode #34], and his highest level of value is the transformation. And I just think this fits so beautifully with having a business model that puts the relationship at the center, because when you provide customers with transformations, the customer is the product.

  • What's higher than actually transforming the customer from where they are to where they want to be. You know, we try and keep track of every subscription based business, as I'm sure you do, and you probably do a better job than we do. It's inundating just how many things you can subscribe to, all sorts of things now. Has there been something recently that's really excited you or impressed you? I mean, I see Rome, where you can subscribe to houses, you can subscribe to a boat now from Brunswick with sailing lessons from a captain, and all this kind of stuff. Is there anything out there that you see that's really novel and new?

  • You have also started thinking about the Internet of Things. That's going to be just an effervescence of all this, isn't it?

  • The other thing you point out, and I love this, that many companies prioritize acquisition over retention. But that's a misplaced mindset. And we see this all the time, your cable company gives somebody six months free, and you've been a member for 15 years, and they give you nothing. How do you coach your people through that?

  • Awesome. Well, Robbie, this is great. Any new books in the works?

  • That's going to be in my feed. So I look forward to that.

  • Thank you so much, Robbie. This has been fantastic. We knew it would be, and congratulations on the books. They're really, really good, and we recommend them highly. So, Ed, what do we have coming up next week.

Ed Kless: Next week, Ron, we have Peter Robinson, host of Uncommon Knowledge.

Ron Baker: My hero, and the author of Ronald Reagan's “Mr. Gorbachev, tear down this wall” speech. I’m really looking forward to that. See you in 167 hours.


Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

This week was Bonus episode 319 - “The C-19 vaccine and the FDA”. Here are some of the links we discussed: