Hey, gorgeous.
It's Paris Hilton. Get the party started with my new album, Infinite Icon, out now and stream the new single, Bad Bitch Academy. I wanted this album to be an escape, to take people to a happy place where they can heal and party in equal measure and most of all, be your own unapologetic icon.
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And me, John Sopel. With Global's award winning podcast, The News Agents, dropping daily, covering everything you need to know about politics and current affairs and the news agents USA in the race for the White House. Listen to the news agents on Global Player. Roku has what you need to make your college home away from home feel more like your own. Make your dorm the place to be with Roku TV or bring a Roku streaming stick to easily access all your favorite free and premium content like iHeartRadio. Stream your favorite playlist with the Roku vibe setting smart light strips to sync your music to millions of colors and make your dorm feel more like you. Make your dorm the place to be with Roku TV, streaming players and smart lights.
Head to Roku.com or your favorite retailer to deck out your dorm. And we continue with our American stories. Our next storyteller is Tim Harford, an economist and bestselling author of 50 things that shape the modern economy. Here he is to tell the story about three of those things, starting with the LLC. The limited liability company was very important in allowing companies to raise money. What is essentially true about a limited liability company is that if you and I say decide we're going to invest in a company and we decide we're going to put $10,000 into a company and try and get it all started, we may lose our $10,000. But we can't then be pursued for any more money. Like I've put my $10,000 in, you can't get $20,000 out of me or $50,000 or a million dollars if the company does something wrong.
My liability is limited to the amount of money I originally put in. And so having this protection for investors made it more attractive for investors to put money into companies. It made it easier for companies to raise money because their investors knew there was a limit to their downside. And that in turn was important because it meant that suddenly you could raise money from people who didn't know you.
Previously, you would only be able to raise money from very close friends, from family. So limited liability enables companies to go out and raise money from a large number of strangers. You think about companies such as General Electric trying to set up an entire electricity grid. Or you think about the railway companies. How is a railway company supposed to make money? You've got to build an entire railway and you've got to put the trains on it before you can collect a single dime from any railway passenger.
Clearly, you've got to raise a huge amount of money. So the limited liability structure allowed that to be possible. And so you could have these huge infrastructure projects, water, railways, electricity. There have been a lot of downsides. Of course, a lot of people have been ripped off by limited liability companies. Companies have taken too much risk. But overall, I think you would say this was a very important step in the creation of major multinational companies.
They really couldn't exist without limited liability. There's a lot of concrete in the world. It's probably the substance that we humans use more of than anything else with the exception of water. It's a very, very flexible, very versatile building material from the point of view of an engineer or an architect. Actually, the trouble with concrete is once it's built, there's nothing you can do with it.
You can't change it. It's not like bricks. Bricks you can take down a brick wall or a brick house and reuse the bricks.
But for a structural engineer or for an architect, it's a very, very robust, flexible and inexpensive material. And so we pour a lot of it. Concrete bridges, concrete skyscrapers, it's everywhere. There is an amazing fact that I checked three times and then some colleagues of mine at the BBC said they didn't believe.
And so they fact-checked me and they came back and said that you were right all along, Tim. And that fact is that in three recent years, China poured more concrete than the United States did in the entire 20th century. It gives you a sense of the building boom going on in China and how incredibly important this material is.
Where did it come from? We've had concrete for a very long time that's been discovered in settlements in Turkey, 8, 10, maybe 12,000 years ago. The Romans used a lot of it. The Parthenon, if you ever have the chance to go to Rome, there's this ancient church. It's nearly 2,000 years old called the Parthenon. It's made of concrete. And if you go in and you look up, it is recognizably concrete. It reminds me a little bit of the Washington DC metro system.
It's quite striking. And the big leap forward was in the 1800s, a French gardener called Joseph Murnier was trying to make concrete flowerpots. And they didn't really work until he realized he could reinforce them with a steel mesh. The steel and the concrete, as it happens, expand and contract when they get hotter and colder at almost exactly the same rate. This is very unusual for two materials, but it means you can put steel reinforcement inside concrete and it won't instantly crack when the concrete heats up. It makes the concrete vastly stronger under certain kinds of stress. And it means you can make concrete skyscrapers, concrete bridges, which would have been impossible. We are maybe storing up trouble for ourselves because some of those reinforcements are starting to get exposed to the elements. They're starting to rust. That makes the concrete way, way weaker.
And so you see these dreadful bridge collapses that happen from time to time. That's catching up with us and it's probably going to catch up with China too. Paul Samuelson, who won the Nobel Prize for economics a few decades ago, Paul Samuelson said that the index fund ranks alongside wine, cheese and the wheel as an invention of human history. I mean, that may be slightly exaggerating things, but the index fund has saved a lot of people a lot of money.
The basic idea of an index fund is you want to invest in the stock market rather than pay some experts to pick stocks for you, for which they will charge you handsomely. Why not just invest in the market as a whole? Just say, well, if the market as a whole goes up, I make money. If the market as a whole goes down, I make the money.
But I'm not going to worry too much about picking stocks. And perhaps surprisingly, that turns out to be really just as good as paying an expert and cheaper. There's lots and lots of evidence that suggests that it's very hard for expert stock pickers to do much better than just whatever the market is doing. So this was observed by Paul Samuelson, this Nobel Prize winning economist. And he wrote in an essay saying somebody should invent a kind of fund that just invests in the index. This is probably the first time in human history this has ever happened is somebody paid attention to something that an academic economist said and said, you know what?
This is a good idea. His name was John Bogle. And Bogle had just set up his own investment company. And he was looking for low cost investment strategies.
And he came across Samuelson's challenge. And he said, well, I'm going to develop an index fund. And at first, he was a laughing stock. Other Wall Street funds criticized him, scorned him, accused him of being a communist, accused him of being unpatriotic because, you know, Americans aren't willing to settle for the average. They want to do better. And initially, nobody invested.
Nobody showed up. But slowly, slowly, slowly, his fund got more and more investors. And the company is called Vanguard. It is one of the largest fund managers on the planet. And the strategy now of just passively investing in the market is hugely popular.
It's all down to Bogle and Samuelson. And I saw an estimate that something like a trillion dollars, if I remember rightly, something like a trillion dollars of investors' money has been saved that would otherwise have been paid in fees to Wall Street over the last 40 years. And it's how I do it. I mean, I write for the Financial Times. I'm an economist. I have quite a keen interest in markets.
But I know enough to know I don't think I can beat the market. So I use, as it happens, I'm not paid to endorse them. As it happens, I use Vanguard index funds. They seem as good as any.
And, you know, it's the same performance but for lower fees. So if a Financial Times columnist and professional economist is saying, I can't do better than a passive index fund, I think the same is true of most of the people listening to this program. Doing a terrific job on the production, editing, and storytelling by our own Greg Hengler. And a special thanks to Tim Harford. He's the author of 50 Things That Shaped the Modern Economy. By the way, you can hear more of these from Tim.
Go to our American Stories in the search bar and just type his name, Tim Harford, H-A-R-F-O-R-D. And my goodness, what we learned about the LLC, the Limited Liability Company, and this limits the liability of investors, which then allows more money to be raised. And yeah, there's some downsides. There can be some fraud and there can be some other problems. But the upside is just so much more consequential. My goodness, the amount of concrete that was poured in China, in America, and around the world.
It's unimaginable, the world without concrete. And then, of course, the index fund. John Vogel being laughed at and ridiculed in the early days as he started the Vanguard funds. And now, of course, I don't know many Americans who aren't a part of index funds.
The story of index funds, the LLC, and concrete here on Our American Stories. Hey, gorgeous. It's Paris Hilton. Get the party started with my new album, Infinite Icon, out now and stream the new single, Bad B**** Academy. I wanted this album to be an escape to take people to a happy place where they can heal and party in equal measure. And most of all, be your own unapologetic icon.
Listen on iHeartRadio and visit infiniteicon.com to order the album. Sponsored by 11-11 Media. There's two kinds of people in the world. People who love health aid kombucha and people who have never tried it. The bubbly mix of probiotic tea and refreshing juice is delicious and good for your gut health with great flavors to choose from that you can't help but love. If you've never tried it before, maybe try a bottle or can of passion fruit tangerine or ginger lemon. Your taste buds and your gut will thank you.
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From me, Emily Maitlis. And me, John Sopel. With Global's award-winning podcast, The News Agents, dropping daily covering everything you need to know about politics and current affairs. And The News Agents USA in the race for the White House. Listening to The News Agents on America's number one podcast network, iHeart.
Open your free iHeart app and search The News Agents to start listening. Roku has what you need to make your college home away from home feel more like your own. Make your dorm the place to be with Roku TV. Or bring a Roku streaming stick to easily access all your favorite free and premium content like iHeart Radio. Stream your favorite playlist with the Roku vibe setting smart light strips to sync your music to millions of colors and make your dorm feel more like you. Make your dorm the place to be with Roku TV's streaming players and smart lights. Head to Roku.com or your favorite retailer to deck out your dorm.
