In this clip, Glenn takes you to Vietnam in the early 20th century with a story that shows exactly why central planning NEVER works but the free market ALWAYS does. Glenn begins with colonial authorities in Hanoi, a plan that spun WAY out of control, and rodents that began to terrorize the city. This is a story about unintended consequences, and why government today FEEDS off of rat farms…

Transcript

Below is a rush transcript that may contain errors

GLENN: I want to show you why central planning never works. And why the free market always does. Because the free market doesn't have to anticipate to things. It reacts to things quickly. Let me give you an example. I -- I looked into rat farming over the weekend. Don't ask me how. Don't ask me why. But it started with an article written by Charles Hugh Smith of Two Minds blog. And it is fascinating.

And it takes you back to around the turn of the century. 1900.

And it is the story of how colonial authorities, in Hanoi, came to establish would it kinds of rat farms. And one was intentional.

The first rat farm was unintentional. The French colonial authorities decided to modernize the French quarter of Hanoi, where the Westerners lived by constructing a modern sewer system. The goal was establish a little Paris in the east.

Now, their understanding of sewers was limited to the First Order Effect. First order, second order effect, important to understand.

First order effect, this is where it ended.

Sewers collect and dispose of human waste. That's first order. What are you trying to do?

Build a sewer. Well, what's the effect of that?

Oh, it will take all the flushy parts, and flush them out into the ocean, or wherever. Okay?

That's all they understood. They didn't -- they didn't anticipate the second order effect.

Which was, sewers are paradises for rats.

Now, there was a whole new rat's nest ready to crawl through. All of these pipes. And it was full of food, that rats just loved.

So the second order, is unintended consequences.

First order is, that's what we're going to do. Second is, oh, crap. We just did this. And it was a good thing. Now we've created this problem. Okay?

So second order effects, consequences. Have their own consequences.

And so on, and so on. So the rats started in the sewers. And they began roaming the streets of Hanoi, not exactly the Paris of the East.

So the Bubonic Plague hits Hanoi 2000 -- or, sorry, 1902.

And now, you've got a -- a real health crisis going on. What caused the health crisis?

Oh, the rats, which were caused by the sewers, which was caused by the idea, I really want to have a nice Paris type town. So what did they do?

Well, they hired crews to go down into the sewer and kill the rats. It was not fun. Crappy work, and hazardous.

Now, they killed thousands of rats every single day. But rat fertility is more than a match for the extermination crews.

So then the city said, you know what, everybody, you catch a rat. You catch a rat. We'll give you a bounty for every dead rat.

Well, everybody got involved. And then it was we have a pile of dead rats. Just bring us the tail. Because the pile of rats, waiting to be disposed of, was too expensive. So what did they want to do? Make sure they didn't have a pile of dead rats. Unintended consequence by saying, okay. Just bring us the tail.

Rat farms began to sprout up, because you could cut the tail of a rat off, and hand it in.

And I'm not sure if the rat would degree another tail, but it would at least be there to breed.

STU: That's incredible. I love this scam.

GLENN: Is this not great? Great?

So they discovered that they had -- they had started to have perverse incentives.

Rat farms were built all around Hanoi by private sector entrepreneurs to maximize the harvesting of profitable rat tails.

So in effect, the government created two rat farms. Both unintended, really. The sewers and the private sector rat farm.

In 1998, the Vietnamese authorities, closed restaurants selling cat meat, which was marketed as little tiger meat.

Because they thought of it, if the cat population increased, rats would invade the Rice fields, showcasing the same mentality, that had happened before.

Happened -- happened again. Happened again. Rats. And what do we do with the rats?

Here's the thing: If you look at our society now, everything we are trying to fix. Let's fix education. Let's fix -- let's fix health care.

Let's fix homelessness. We're going to fix our intelligence gathering, our national defense. What do we do?

We pour all kinds of money into this sewer system, people who are now administrators, support staff, consultants, con artists. Some good people in there. But the system wants the money to keep flowing.

So they're not incentivized to actually solve a problem. They actually become people to protect the paradise of more and more funding.

This is why -- this is why the free market works. And why the government must get out of the market. Because once they start protecting their boys, it becomes a rat hole.

It's another rat farm.

You've got to get the government out of the farming business.

Out of the rat problem.

Because they're the biggest source of them.

Oh.

STU: This reminds me of -- of a story I freaking love from a couple of weeks ago.

In New York, they had a gun buyback.

GLENN: Oh, exactly right.

STU: And first order effects. We'll get guns off the streets. We'll make everyone safer. Of course, they don't think of the second order, which means that law-abiding citizens can no longer protect themselves. But I'm not even talking about that one.

One guy saw how stupid it was. And got his 3-D printer out, and started 3-D printing a small device that can convert firearms into fully automated weapons under the rules of the buyback. And this is by Leticia James, by the way, in New York.

And city police, that entitled him to $350 for each printed part, including a 100-dollar premium, since they redeemed ghost guns, lacking serial numbers. So these are just little 3-D printed parts.

He kept doing it and doing it and doing it. And eventually made himself $21,000 for just printing them. He's never going to use as automatic weapons.

GLENN: And he shouldn't go to jail.

STU: No, I don't think he is. He played by the rules. Did exactly what they asked him to do. Made $21,000.

He said, he didn't do it for the money, however. He said he called the idea of buybacks, ridiculously stupid.

Adding that, quote, the people running this event, are horribly uneducated about guns, gun crime, and the laws surrounding the regulation of guns.