0:00

All right, listeners, welcome to episode 83 of

0:02

Know Your Enemy. I'm Matt Sitman, your podcast

0:05

co-host, and I'm here as always with my

0:07

great friend Sam Otherbell. Hi, Matt.

0:09

Hey, Sam. My voice almost cracked there

0:12

for some reason. My voice sounds bad. It's

0:15

cold season here in New York. How

0:17

are you doing today, Sam? Well, I'm all

0:19

right. Excited for this episode. Good, meaty, meat

0:22

and potato style Know Your Enemy episode. That's

0:24

right. Pull up a chair,

0:26

friends. This was, as you said, Sam,

0:28

a meaty episode, and it was about

0:30

a meaty book, which is just

0:32

out November 14th, Jennifer Burns' big

0:34

biography of Milton Friedman. It's called

0:37

Milton Friedman, The Last Conservative. It

0:39

clocks in right around 500 pages.

0:41

So compared to the J. Edgar Hoover bio

0:44

of Beverly Gages, this is a comparatively

0:46

lighter read. But for those

0:48

who don't know Jennifer, I remember I was

0:50

in grad school, I think, when her first book

0:52

came out, which was on Ayn Rand. It's called

0:54

Goddess of the Market, Ayn Rand and the American

0:57

Right. So this book on Friedman of hers that's

0:59

just out, it's kind of a continuation

1:01

of her biographical explorations

1:03

of the American right, and specifically

1:06

more libertarian figures on the right.

1:08

And of course, she's a research fellow

1:10

at the Hoover Institution, where Friedman's papers

1:12

are, and an associate professor of history

1:15

at Stanford University. And as our

1:17

listeners will soon hear, a very

1:19

generous and intelligent guest who I

1:22

was so impressed with just the

1:25

synthesis and how much material she

1:27

had mastered to write this book. Absolutely.

1:31

I learned a lot about economics, especially

1:33

the University of Chicago, their economics department

1:35

around the time of the Great Depression.

1:37

It was a little more complicated and

1:39

nuanced than you might guess. Yeah, I

1:41

think it's probably worth saying. I think

1:44

this episode would pair really well for

1:46

listeners, especially newer listeners, with an episode

1:48

we did a long time ago with

1:50

Marshall Steinbaum. It's called Windbag City, and

1:52

it's about the Chicago School of Economics

1:54

and the law and economics program in

1:57

the law school at University of Chicago.

2:00

If any listeners know Marshall, it's a very

2:02

withering takedown of sort of Friedman and Friedman-ite

2:04

thought, which is not really what this episode

2:06

is. This is much more kind of in

2:08

the style of, let's get a sense of

2:10

who this person was and what he thought.

2:13

And every once in a while, sort of

2:15

puncture some myths about him. So we'll put

2:17

the Steinbaum episode in the show notes. And

2:20

I think they might really pair really well

2:22

together if you're a listener who hasn't heard

2:24

that one. Yes, definitely, Sam. We are critical

2:26

of Friedman, especially towards the end of the

2:28

episode. But I think our listeners would rather

2:30

hear, how was Milton Friedman different

2:33

as a kind of species of libertarian

2:35

than say Hayek or Mises? Those

2:38

are the kinds of things we wanted Jennifer to

2:40

explain to us. And she was just a great

2:42

guest. Yeah, absolutely. Should we do housekeeping, Matt? Yes.

2:45

Now for some housekeeping items. As always, we're

2:47

grateful to our partners at Dissent. They sponsor

2:49

the podcast. And one thing they do for

2:51

us is, and you all should take advantage

2:53

of this, is subscribe on

2:55

patreon.com/knowyourenemy to the podcast for $10

2:58

a month. Dissent

3:00

gives you a free digital subscription. And

3:02

I know this spring, Sam and I are co-editing

3:05

a special section of the spring issue on kind

3:07

of the global far right. So

3:09

Dissent is always great, but the

3:12

Know Your Enemy boys will be back

3:14

in the editorial saddle this spring. So

3:16

get that subscription started now. And

3:18

of course, for $5 a month, you get

3:20

access to all of our bonus episodes. And

3:23

our last one was on the election of

3:25

Javier Millet in Argentina with our great friend

3:27

David Adler. And he knows so

3:29

much about Latin American politics and is on

3:31

the ground. And so you should

3:33

give it a listen because I'm really

3:36

proud of some of those episodes that are

3:38

behind a paywall, but are for the real

3:40

nerds out there. Yeah, it's a great episode.

3:42

I re-listened to it recently because I was

3:44

reading Millet news and was like,

3:46

what did we say exactly? And I went

3:48

back to it and David is really so

3:50

good. And it was just a few days

3:52

after the election and you're going to keep

3:54

seeing crazy news coming out of Argentina now

3:56

that he's president. And I think

3:58

the place setting that we do in the that episode is

4:00

pretty indispensable. So if you're not a

4:02

subscriber, you better subscribe and

4:04

listen to our conversation about anarcho-capitalism in

4:06

Argentina. Anyway, moving on, as always, we

4:08

wanna thank our intrepid producer, Jesse Brenneman,

4:10

who did a great job at this

4:12

episode, as he does with all of

4:14

them. And we wanna thank Will

4:17

Epstein, who does the music for the podcast. Yes,

4:19

thank you to both of them. Thank you to

4:21

you, Sam. Thank you to Jennifer. And listeners, I

4:24

have reached the point of maturity where I

4:26

no longer read reviews of the podcast on

4:28

Apple Podcasts. So I don't know what's being

4:30

said there, but every once in a while,

4:32

we like to remind you to subscribe and

4:34

comment. Rate the podcast and

4:37

review it. We'd love that. Apparently it helps

4:39

with the algorithm. So please. Yes, that's right.

4:42

All right, here's our episode on

4:44

Milton Friedman, the libertarian economist with

4:46

Stanford's Jennifer Burns. Enjoy. All

5:04

right, let's get started. Jennifer Burns, welcome to

5:06

Know Your Enemy. Oh, thanks so

5:08

much for having me. I am such a huge

5:10

fan of this pod, and I'm really excited to

5:12

be here. Well, thank you. This

5:14

book, it's just been published just a

5:16

little earlier this month. Congratulations, Jennifer. And

5:19

the book is Milton Friedman,

5:21

The Last Conservative, a provocative title, especially

5:23

that subtitle. That's what we're gonna talk

5:25

about today. It clocks in what, just

5:27

under 500 pages. So

5:30

a light read compared to Beverly Gage's J.R.

5:33

Gohuver biography, you might say. But

5:35

before we really dive into the substance of

5:37

the book, one thing we like to ask

5:39

at the start of these episodes, especially about

5:42

a project like this that you spent years

5:44

of your life on, probably close to a

5:46

decade, right? Actually, a little bit more.

5:49

I'm being perfectly honest. And

5:51

we mentioned your previous book in our introduction,

5:53

your biography of Ayn Rand, called Goddess of

5:55

the Market, Ayn Rand, and the American Right.

5:57

So you're a natural, know your enemy, gab.

6:00

You've been a historian of the right and

6:02

especially these kind of more libertarian figures and

6:04

I was just kind of wondering You know

6:06

how you decided to write this book about

6:08

Milton Friedman how you landed on him as

6:10

a subject and kind of how this project

6:12

first took shape It

6:15

pretty much grew out of the Rand book,

6:17

which again is my doctoral dissertation at UC

6:19

Berkeley and I was just Really

6:21

interesting when I ran I didn't know much about

6:24

her and I knew people were still reading her I

6:26

knew she had to be significant particularly the conservatives and

6:29

libertarians and so I kind of started digging into

6:32

Rand and made the election biography

6:34

in my dissertation and then my first

6:36

book and it was such a great experience

6:38

Kind of from start to finish. It was

6:41

really intellectually satisfying I really liked thinking about

6:43

fiction and ideas and ideology and how

6:45

they all came together And I

6:47

didn't really have a clear plan what I would

6:49

do next I never had this career path of like

6:52

I will write biographies of iconic conservative thinkers

6:54

I was not like a master plan at

6:56

all And so when I

6:58

was thinking about what to do next I

7:00

was interested in kind of writing more of a synthesis

7:02

of Conservative ideas I

7:05

was interested in you all probably

7:07

familiar with George Nash's classic work

7:09

and the conservative intellectual movement So

7:11

I was thinking huh, maybe I'll do something

7:13

like that I was also really curious about

7:15

this was at the time when the term

7:17

neoliberalism was being bandied about quite a bit

7:19

in the academy I was like, what is

7:22

neoliberalism? Like what are people talking about when they

7:24

say this? So I had these kind of two projects

7:26

that maybe I do a bigger thing to lead history And

7:29

they do a concept history of neoliberalism and it couldn't

7:31

really get any traction And

7:33

eventually I realized I needed to go through the

7:35

Chicago school And so as I started thinking about

7:37

well how do I get into Chicago school? Like

7:39

well, I could read about Milton Friedman and

7:41

then it was like, oh, well, there's not really a good

7:43

book on Milton Friedman I was like, oh no It's

7:46

just calling my name And so eventually I

7:48

decided this was a way to answer those

7:51

questions kind of using the medium of

7:53

biography And I think biography is such

7:55

a great way to get into

7:58

these bigger questions and especially like sick

8:00

and complicated ideas that you sort

8:02

of need to be eased into if you're not a

8:04

specialist. I was hesitant because

8:06

mainstream professors don't really write biographies or

8:08

maybe they write one. They usually don't write two

8:10

in a row. And so it took me a while to just decide,

8:13

you know what, I'm going to do what I'm going to do. I

8:15

think this is going to work out. So, Raeanne

8:17

gave me access to a kind

8:20

of grassroots energy that was

8:22

really homegrown and she sort of succeeded

8:24

against all the odds. And

8:26

three of myself very different. This

8:28

was an elite credentialed, kind

8:31

of top down presence. And so I

8:33

thought both of them together would give me

8:35

more of a picture in the round. Friedman,

8:37

of course, was born July 31st, 1912, and he died

8:39

November 16th, 2006.

8:42

He was 94 when

8:44

he died. So he lived a long

8:47

time. His life did basically span the

8:49

20th century. He's a famous libertarian economist.

8:51

Again, as you mentioned, he's associated with

8:54

the Chicago School of Economics, which as

8:56

the term indicates, is centered

8:58

on the economics department at the University of Chicago

9:00

where he taught for nearly three decades. So

9:03

this towering figure, he's someone when

9:05

I was a young conservative, I of course knew

9:07

about his book, Free to Choose, was

9:09

the kind of thing that circulated among interns

9:11

on the right back then. But things are

9:13

kind of different on the right now. This

9:16

is a different right than the one Friedman

9:18

was on for most of his life, or

9:20

at least the Republican Party. He seems kind

9:22

of a man out of time right now.

9:24

He's not someone the young intellectuals

9:26

on the right are seeking

9:28

out. And it's not his books, right? They're passing

9:30

along. For listeners, it might be like, why should

9:32

we care about this guy? Why did you

9:34

spend over a decade writing this book? When

9:37

you were doing the research, did anything strike

9:39

you as really new, kind of an assumption you

9:42

had about Friedman that really turned out not

9:44

to be true? Or just in

9:46

general, what you learned about him that you

9:48

didn't know going into it? So

9:50

why should we care about Milton Friedman when he's

9:52

not the name on the lips of the young

9:54

conservative of today? To kind of answer this question,

9:57

I actually want to argue against my title a

9:59

little bit. So my sub-title is The Last

10:01

Conservative. But as I was finishing my research

10:03

and kind of pulling the book together, I

10:05

realized that in some ways that's a

10:08

disservice just to think of Friedman as a

10:10

conservative because particularly in the last

10:12

decades of his life, his ideas

10:14

became very dominant, not just for

10:16

conservatives, not just for Republicans, but for

10:18

Democrats, for centrists, in many different countries

10:21

across the globe. It really came to

10:23

define this sort of market consensus

10:25

that I think really solidified in

10:27

the wake of the ending of the

10:29

USSR, but also became dominant in the

10:32

time of cyclation in the mid-70s all

10:34

throughout the 80s. And so the

10:37

reason why Friedman is important is because

10:39

so many of the ideas and suppositions

10:41

and assumptions we sort of take for

10:43

granted in our contemporary world were ones

10:45

that he really advocated for and pushed

10:47

through and I wouldn't say is solely

10:49

responsible for, but really embodied and crystallized.

10:51

So I think if you read this

10:54

book, you realize how many things you

10:56

take for granted and that actually were part

10:58

of a historical process and part of intellectual

11:00

change across the 20th century. The

11:02

other thing I would say, that in terms of

11:04

the question to like, what did you learn about

11:06

Friedman that surprised you or what do you want

11:08

listeners to know? One thing I want them

11:10

to know is that the Friedman

11:12

on YouTube is like the tail end of

11:14

Friedman. The one that we encounter in the

11:17

popular media, interviewing Donahue, I sort of think

11:19

of this as like the decadent Friedman. This

11:21

is Friedman in the last years of his

11:24

life when he's become sort of a figurehead and

11:26

a symbol. And I think

11:28

the early Friedman is much more

11:30

intellectually rich and robust and interesting

11:33

and more dynamic. And so

11:35

in terms of the things that I learned,

11:37

there were so many, I'll just say two. One

11:39

was when I began the research, it

11:41

started diving deep into the Chicago school, the history

11:44

of the Chicago school, which is this sort of

11:46

fashion of free market economics and Milton

11:48

Friedman arrived there in the Great Depression. And

11:51

I assumed that he would have learned

11:53

from his professors like, oh, this

11:55

is just a natural market correction. We shouldn't really

11:57

do anything or we shouldn't really worry about it.

12:00

And it found sort of the complete opposite,

12:02

like a high level of concern and distress

12:05

over what was happening, lots of proposals to

12:07

the federal government saying what the federal government

12:09

should do to help, and just a sort

12:11

of all hands-on deck mentality in

12:13

this economic crisis. And so I sort of had

12:15

to check myself and then be like, well, who

12:17

were the people who were saying, it's laissez-faire capitalism,

12:20

just let it happen. And there's really like only

12:22

a handful of those people. And Friedman

12:24

is not one of them. His teachers are not among them.

12:27

The other thing that I talk about in length in my book

12:29

that I had no idea about was the number

12:32

of women economists who collaborated with

12:34

him formally and informally behind all

12:37

his major work. And

12:39

I think some reviewer was like, oh, of course she's talking

12:41

about women, you know, it's 2023. And

12:43

I'm like, no, no, no, this was actually there in the

12:45

source material. Like I didn't come with some

12:48

like feminist agenda. I just

12:50

kept finding these women and being like,

12:52

what are they doing here? And then

12:54

for me, that really helped me understand

12:56

the depth and breadth of Friedman's career

12:58

because he was able to draw upon

13:00

sort of the combined intellectual forces of

13:02

many different people who were not able

13:04

to assume the kind of public facing

13:06

role that he was by virtue of

13:08

his race and gender at the time.

13:11

Right. I want to talk

13:13

about that more later. It's like two of the

13:15

three books I noticed that are in his Nobel

13:17

citation were collaborations with women. Right. And

13:20

he didn't have to like make up

13:22

some feminist agenda to show that his

13:24

career was enabled by the genius of

13:26

several talented women. Exactly. I

13:28

mean, that citation drives me crazy because

13:30

at least the announcement, several parts of

13:33

it, they identify a monetary history of

13:35

the United States as his book. And

13:37

I'm like, no, it's not his book. He wrote it with someone

13:39

else. Jennifer, one quick question to clarify

13:41

here. You mentioned some of our listeners might

13:44

encounter Friedman on YouTube. What do you mean

13:46

by that? And I guess kind of as

13:48

a follow up because you had written your

13:50

previous book on Ayn Rand, you

13:52

know, she was a popular figure, right? We all

13:54

know the kind of teenage Ayn Rand fan, like

13:56

it's a type. I was wondering like

13:59

how famous was. Friedman, like what an

14:01

ordinary American have known about him. I'm

14:03

thinking especially of the show he did

14:05

with his wife, Rose Friedman, on

14:08

PBS in 1980, which was like broadcast in

14:10

75% of PBS households. I

14:14

mean, he was among the first

14:16

celebrity economists. So he first

14:18

became very popular in the sort of public

14:20

eye, with the publication of a monetary history,

14:22

which was in 1963. So this enormous blockbuster

14:26

book that he authored with Anna Schwartz, that

14:28

was where he started disappearing in the news

14:31

all the time because it was a new

14:33

interpretation of the Great Depression, which was still

14:35

very fresh, less than 30 years prior in

14:37

that moment. And then the

14:39

second boom came when he signed up

14:41

as an advisor to Barry Goldwater's presidential

14:44

campaign. And basically the

14:46

media couldn't make head or tails of

14:48

Goldwater. Like, what are you for Senator

14:50

Goldwater? He really didn't have any answers.

14:52

And Friedman would pop up and say,

14:54

well, here's what Goldwater believed. So he

14:56

became this sort of spokesperson for Goldwaterism.

14:59

Then after that, he became a columnist

15:01

for Newsweek, alternating with Paul Samuelson and

15:03

one other economist. And Newsweek today has

15:06

fallen from its heights, but Newsweek was

15:08

one of the like big three magazines

15:10

out there. And this is where people

15:13

got their news. This is what sort

15:15

of shaped the narrative. And so Friedman

15:18

was a source of economic analysis in

15:20

the news week. He started in the sixties. I

15:23

mean, I think it ran for 20 years. And

15:25

then towards the end of his career after he

15:27

had retired, he and his wife

15:29

Rose produced this television series, Free

15:31

to Choose. The Visali

15:33

family, like all of us who live in the

15:35

United States today, owe much

15:37

to the climate of freedom we inherited from the

15:39

founders of our country. But in the

15:42

past 50 years, we've been

15:44

squandering that inheritance by allowing government to

15:46

control more and more of our lives

15:48

instead of relying on ourselves. We

15:51

need to rediscover the old truths that the

15:53

immigrants knew in their bones, what

15:56

economic freedom is and the

15:58

role it plays in preserving freedom.

16:00

This aired in 1980 and it kind

16:02

of got wrapped up not formally into Reagan's

16:05

campaign, but I would say it's part

16:07

of the kind of cultural moment where Reagan

16:09

is saying we have to sort of

16:11

free the economy, we have to rediscover what

16:13

populism can do, and Friedman is saying

16:15

the exact same thing. And so that just

16:17

gave him this enormous public profile. Friedman

16:19

was on the cover of Time magazine. This

16:22

is when this was like a huge

16:24

cultural achievement. He was on the cover of

16:26

the New York Times magazine. In 1980,

16:28

the Free to Choose book was a bestseller.

16:30

So that really made him into, I

16:32

would say, sort of a household name

16:34

and a public figure in a way

16:37

that I don't know could be replicated

16:39

today in our more fragmented media environment.

16:42

Now, the YouTube Friedman phenomenon, there's

16:45

kind of two parts. One is interview clips

16:47

of him or clips of him on Donohue.

16:49

He's kind of like Ben Shapiro of his

16:51

day. If you've been Shapiro videos where they're

16:54

like, watch Shapiro smack down, such and such.

16:56

Friedman has this quick rebarquet that gets circulated.

16:59

Slightly separate from that, I would say, is the

17:01

Free to Choose series. The first

17:03

half of the episode is Friedman kind of voyaging

17:05

around and going to Hong Kong or going to

17:07

the one-room schoolhouse and talking about his ideas. The

17:09

second half, he sits down in Harper Library, University

17:12

of Chicago kind of wood paneled,

17:15

very traditional room with

17:17

a cast of characters to debate.

17:19

These are live action debates. He

17:21

brings in people that definitely dislike

17:23

him a lot. Francis Fox Piven

17:25

is there. He brings in some

17:27

of his buddies. There's a young

17:29

Don Rumsfeld. They actually debate

17:31

and argue. A couple of people have pointed out

17:33

to me recently, like, wow, this

17:35

is so great. Okay, they're kind of corny,

17:38

but nobody's doing this anymore. Nobody's building a

17:40

career on substantively

17:42

and publicly arguing with people who they

17:44

disagree. This isn't Twitter snark.

17:46

This is like they're actually in a room

17:48

together arguing. I guess while I

17:50

kind of bagged on the YouTube Friedman, I do

17:52

think some of those Free to Choose episodes are

17:55

gesturing towards something

17:57

that maybe we could use more of at this moment in

17:59

time. Yeah, I want to reset

18:01

slightly and proceed somewhat chronologically through his

18:04

career. If you could start us off

18:06

just sort of giving us a short

18:09

flavor of what his early life was like, what

18:11

his family life was like growing up. Yeah,

18:13

for sure. So Freeman grew up in

18:15

Raway, New Jersey. And what's

18:17

interesting about his family, they were Jewish immigrants from

18:20

Eastern Europe, you know, in the wave of immigration

18:22

that came in the early years of the 20th

18:24

century. But most of those immigrants

18:26

stayed in New York. They stayed in Chicago. They

18:29

were immersed in these more urban cultures

18:31

that were often very left leaning or

18:33

very socialistic. Freeman's family went

18:35

to Raway, New Jersey, small town,

18:37

one of about 10 Jewish families

18:40

in this town, you know, several

18:42

hundreds. And they ran a dry

18:44

goods store. And Freeman

18:46

grew up in this kind of

18:48

prototypical American boyhood that was pretty

18:50

rare for an immigrant at the

18:52

time. And you know,

18:54

his family was they weren't poor, they

18:56

weren't well off, they were doing okay.

18:58

They had property, they had businesses, they

19:00

were able to kind of have their

19:02

children have a nice life. I went

19:05

through all the newspaper records. And so I was able to

19:07

find Freeman later would be like, my parents were very poor,

19:09

like, like, I really weren't that

19:11

poor from the evidence that I uncovered. He

19:13

had sisters, right? Didn't he grow up with all sisters?

19:16

Yeah, he was the youngest child,

19:18

three girls above him. And

19:20

they were actually quite distinguished themselves. Some of

19:22

them were higher in their class rank than

19:25

Friedman himself. But the tradition was, as a

19:27

family member told me, you know, the girls

19:29

were going to go to work and the

19:31

boy was going to go to school. So

19:33

really only Milton was considered a candidate for

19:35

higher education. Now the other thing

19:37

that happened that was very formative for him is

19:39

when he was in his senior year of high

19:41

school, his father had a heart attack and died

19:43

very suddenly. And so he won

19:45

all these awards at school. He won

19:47

like a New York Times or a Torrell

19:50

contest. He's obviously very bright, but he didn't

19:52

have a model for what that

19:54

would look like. So his first idea

19:56

was that he would be an actuary,

19:58

you know, somebody running calculations insurance company

20:00

because he was good at math and that was like the

20:02

only thing he sort of imagined he could do. He

20:05

got to Rutgers and it's at Rutgers

20:07

that he met Arthur Burns who

20:09

became this incredible role

20:11

model for him. So Arthur

20:14

Burns was similarly a Jewish immigrant

20:16

who came about age 10

20:18

and then had this incredible

20:20

academic career through Columbia and had

20:22

become a PhD economist. He did

20:24

not have a professor job

20:27

so he was kind of adjuncting at

20:29

Rutgers and Freeman was just really blown

20:31

away by Arthur Burns who seemed so

20:33

like sophisticated and worldly and had this

20:36

whole exciting intellectual career and so

20:38

Burns and another fellow Homer Jones said look

20:40

you've got to be an economist like you're

20:42

good at this you can do this this

20:45

is sort of like a new path. And

20:47

then he as he described it it was

20:49

1932 I mean the worst

20:51

years of the Great Depression and he

20:53

felt like I need to know why

20:55

this is happening I need some answers

20:58

to these questions and economics seems like

21:00

it will get me further than just

21:02

straight math. So that was kind of

21:04

what set him on the path and

21:06

he would go back to Rahway

21:08

for you know holidays and things like that but

21:10

he didn't have much in common with his family

21:12

after that. One of the

21:14

interesting things from that early part of

21:16

his education at Chicago was

21:19

this kind of transition going

21:21

on or at least a

21:23

conflict between what was being

21:25

called neoclassical economics and institutionalism.

21:27

Could you describe kind of the

21:30

difference there and how that transition

21:32

or that kind of conflict influenced

21:34

his education and his later preoccupations?

21:37

So as I describe in the book

21:40

it's a quiet period in economics up

21:42

until the 1930s. There are

21:44

kind of two major divisions one

21:46

would be neoclassical economics so this

21:49

is using the tools of marginal

21:51

analysis to analyze choice under

21:53

conditions of scarcity. So the

21:55

basic building blocks of supply and demand

21:58

curves right if you have a demand

22:00

and a low supply, the price goes up. And

22:02

the idea being that you grasp these things and

22:05

markets over time will settle out in a

22:07

place where everybody is able to buy what

22:10

they want or sell what they want in

22:12

a mutually advantageous way. So this is an

22:14

abstract way of kind of looking at markets

22:16

and looking at economics. And it also has

22:19

a social philosophy, which is markets are the

22:22

most efficient allocators of scarce

22:24

resources. Therefore, we should by

22:26

and large let them do their job

22:29

of setting prices, setting wages and

22:31

allocating goods throughout the economy. So

22:34

in contra distinction to that

22:36

is the institutional school and

22:38

the institutional school grows up

22:40

in opposition to neoclassical economics,

22:42

and it's oriented more towards

22:44

history. It's looking at the development

22:46

of economies over time. And

22:49

it's saying, basically, we're now in

22:51

an industrial era in

22:53

which these older assumptions about

22:55

markets working well and allocation

22:57

being done efficiently no longer

22:59

hold true because we have

23:01

large corporations, we have workers

23:04

lacking power, we have monopolies.

23:06

And we have so much complexity that

23:08

the federal government and state governments need

23:11

to play a role in

23:13

making markets work better, making

23:15

the system more fair. And they would

23:17

often talk about this idea of social

23:19

control, the idea that society should control

23:22

these forces, not be controlled by them.

23:24

And so this played out in reform

23:26

movements, the institutional economists were linked to

23:28

the kind of earlier wave of labor

23:31

laws or minimum wage laws, or they

23:33

pioneered things like unemployment insurance, most of

23:35

these were pilots, so they would be

23:38

taken up more broadly by the New

23:40

Deal. The real difference though, is that

23:42

institutional economists think that in different

23:45

eras, there can be different types

23:47

of economies and different types of

23:49

economic analysis that is needed, where

23:52

the neoclassical economists think, this is

23:54

basically the universal laws of

23:56

economic life, that you don't

23:58

need to follow them exactly. But these

24:00

are basically the way things work whether

24:03

you have a graring economy in

24:05

industrialized economy a post-industrial economy This

24:07

is your basic analysis. And so

24:09

there is this intellectual divide that

24:11

I think is is really important

24:13

And what's significant is that the

24:15

both of these camps are still

24:18

occupying prominent places in

24:20

the economic discipline when Friedman

24:23

enters the University of Chicago

24:25

and basically within 15

24:27

years the institutionalists will have been sort of

24:29

chased out Right. You

24:31

mentioned how important the reaction to

24:34

the New Deal was for Friedman's

24:36

development And you sort of brushed

24:38

aside the assumption that everyone around

24:40

Chicago and Friedman included would be

24:42

just opposed to any kind of

24:45

government Action that wasn't the case,

24:47

but how would you characterize? Friedman's

24:50

reaction to the New

24:52

Deal the Roosevelt solution to the depression While

24:55

it was taking place and I

24:57

think maybe including in this answer is something that

25:00

I found really interesting is your emphasis

25:02

on the fact That even though he

25:04

advocated for a more active role for

25:06

the government and responding to the depression

25:09

In the years of the 30s and into

25:11

the war era You say

25:14

that despite what he would later say about

25:16

himself. He never really had a Keynesian phase

25:19

Yeah, yeah, this is where chronology really helped. So

25:21

he arrives in 1932 And as

25:24

I said, there's great concern about

25:26

what is going on with the Great

25:28

Depression there's support for relief efforts and

25:30

their support for banking and financial reform

25:32

and That's really the first

25:34

thing Roosevelt does is basically reforms the

25:36

entire banking system in the United States

25:39

Deposit insurance you can't like make stuff

25:41

up and your stock prospectuses any more

25:43

you know just really kind of rationalizes

25:45

and regulates that whole sector and Most

25:48

of the Chicago suggestions are very much in

25:51

line with what was taken up in

25:53

the banking act and they actually would

25:55

have gone even Further and pretty much

25:57

done away with fractional reserve banking, which

25:59

is the ability for banks to loan on only

26:01

a fraction of their deposits, they would actually have wanted

26:03

to abolish that. So it was a really

26:05

radical transformation of the financial sector that

26:08

Chicago proposed. And I would say a

26:10

radical transformation of the financial sector happened

26:12

in the early years of the New

26:14

Deal. So that's where Friedman is on

26:17

board. And what Friedman

26:19

gets from his professors is an interpretation

26:21

of the Great Depression that really focuses

26:23

on the banking sector and

26:25

focuses on the financial sector and says, this

26:28

is really the problem. There was like a

26:30

liquidity crisis. There was a breakdown in the

26:32

banking system. This is what made it so

26:34

bad. That is not

26:36

unique to Chicago, but that interpretation

26:38

is very strong at Chicago. In

26:41

other departments, and particularly over time

26:43

in the Harvard department, another

26:45

interpretation arises, which is much more

26:47

global and is much more critical of

26:49

capitalism in general. It's

26:51

kind of a diluted version of the Marxist

26:54

crisis of capitalism. And what it is,

26:56

is an argument that the United

26:58

States economy, maybe the world economy has

27:00

reached a certain level of maturation where

27:02

it can no longer grow in the

27:04

same way. And one

27:06

piece of evidence for this is that the frontier

27:09

is closed. People

27:11

like Alvin Hinton go back to Frederick Jackson Turner's

27:13

1892 essay, The Frontier. It's

27:16

the seedbed of American identity.

27:19

And they say, we have no frontier. And

27:21

the movement west, the movement into the frontier

27:23

was like the economic engine. And so we're

27:25

lacking that economic engine. And we're now going

27:27

to enter a new phase

27:30

of history, which will be characterized

27:32

by secular stagnation. And so the

27:34

explanation is things have changed profoundly.

27:36

We're in a new phase of capitalism

27:38

or a new phase of economic history.

27:41

And we need the federal government to

27:43

tax and spend in a deliberate

27:45

way to keep the motor running.

27:48

And so this is, you can see just

27:50

philosophically different from the idea that we have

27:52

a crisis in a banking and

27:54

financial sector that we can remedy by

27:57

changing the laws and regulations around

27:59

it. then the natural dynamic of economic

28:01

growth will then unfold versus we're in a

28:03

really new state and we need to have

28:05

the federal government play a new role. So

28:08

that latter interpretation, Freeman never buys into

28:10

it. So Freeman supports the New Deal,

28:12

but he's not a quote, new dealer

28:15

in the way that other economists, most

28:17

of them coming out of Harvard, become

28:20

full-throated defenders and advocates

28:22

and expositors of

28:25

the New Deal and the corresponding set of ideas

28:27

that the role of the federal government

28:29

has profoundly changed. For the listeners,

28:31

I think just to sort of

28:33

underscore something, secular stagnation just means

28:35

the economy isn't growing in a

28:37

market society and it's not just

28:39

cyclical. It's just like there's not

28:41

enough growth. And the reason

28:44

that a Keynesian solution is prescribed is

28:46

that that means using the fiscal lever,

28:48

you know, pushing money into the economy.

28:50

The government spends money. It creates the

28:53

later parts of the New Deal, you

28:55

know, the Tennessee Valley Authority, it creates

28:57

jobs, it creates infrastructure projects all over

28:59

the place, you know, that's what the

29:01

Keynesian solution would be. And that's the

29:03

thing that you're saying Freeman never really

29:05

buys into. He doesn't think that this

29:08

fiscal policy, government spending is going to

29:10

resolve whatever set of new

29:12

kinds of problems the 20th century is

29:14

throwing into the global economy. Also,

29:16

that justifies taxation to break up pools

29:18

of capital, which are not going to

29:21

be productively invested because we're now in

29:23

a secular stagnation. So the government can

29:25

productively invest that. So I think Freeman

29:28

will develop two objections to this. One

29:30

is kind of epistemological, like it's not

29:32

possible for the government to sort of

29:35

figure out where the economy is

29:37

slowing down and then to kind of neatly

29:39

inject money in a way that will work

29:42

in a straightforward way. He sort of thinks it's

29:44

too complicated. And then there will be a more

29:46

philosophical objection, which is the government

29:48

is going to get bigger and as the government

29:50

gets bigger, it's going to inhibit or crowd out

29:53

private investment and private economic initiative, which

29:55

he thinks is what powers growth

29:57

and development and innovation and all of that.

30:00

And all in the mix here is just

30:02

a great anxiety and opposition amongst Friedman and

30:04

his sort of cohort about the very prospect

30:06

of planning, like what you just described. The

30:08

government just can't do this as well as

30:10

the market can. Yes. And

30:13

I would say that planning is another key distinction between

30:15

the institutional school and

30:18

the neoclassical school. So the institutionalists have

30:20

much more confidence in planning and much

30:22

more belief that planning is needed and

30:24

see the Great Depression as evidence that

30:27

the economy cannot function without planning. And

30:29

so, yeah, planning becomes this buzzword.

30:32

One more thing while we're talking about Friedman's

30:35

formative years, especially his time at the University

30:37

of Chicago, he was there in 1932, right,

30:39

as the Depression is unfolding. And

30:44

he actually did work for the federal government.

30:46

He worked for the New Deal. Starting in

30:48

1935, right, he began working for the National

30:50

Resources Planning Board. So he went

30:52

to Washington as a New Dealer. But

30:55

there's one thing in particular I wanted to

30:57

ask you about because I just kind of

30:59

sense it really was of some importance to

31:01

him, which is in 1940,

31:03

he was appointed as a professor

31:05

of economics at the

31:08

University of Wisconsin-Madison and really

31:10

encountered anti-Semitism there in a

31:12

way that actually brought him back

31:14

to D.C. By 1941, he's

31:16

back working on wartime tax policy for

31:19

the federal government as an advisor to

31:21

people at the Department of Treasury. So

31:24

not only was the New Deal happening

31:26

around him, but World War II and

31:28

the Holocaust, as a Jewish

31:30

American, what did that early encounter

31:32

with anti-Semitism mean to him? And

31:36

how did that reverberate throughout his life,

31:39

especially wariness of the state and

31:41

what social control and government power

31:44

the agents of the state, what they can do to you? It

31:46

was interesting. He spoke not at all

31:49

about anti-Semitism in his childhood, but I

31:51

did find the recollections of other writers

31:54

who had grown up in Rahway

31:56

who were ganged up on and

31:58

bullied and sort of chased

32:00

by mobs chanting anti-Semitic slogans. So

32:02

that may well have happened to

32:04

him in his childhood and he

32:07

just didn't recollect it. But even

32:09

before he gets to Wisconsin, he's

32:11

very vigilant about anti-Semitism. It's core

32:13

to his identity. He's not practicing

32:15

Judaism, but it's very important to

32:17

him intellectually. And I should just

32:19

tell your listeners, so he starts

32:21

at the University of Chicago. He

32:24

then transitions to Columbia

32:27

University. And so he's in New York

32:29

and he eventually takes up his dissertation.

32:32

Interestingly enough, it's an institutionally oriented

32:34

dissertation that looks at the incomes

32:36

of doctors and dentists and ends

32:39

up looking at this key institution

32:41

of the American Medical Association. So

32:44

on the one hand, he's working

32:46

with institutionalist methods, but he's using

32:48

the neoclassical analysis to

32:50

drive what he ends up arguing. And

32:52

it's an argument about why

32:54

doctors make more money than dentists, which he

32:57

lays at the feet of the AMA, American

32:59

Medical Association. It says the American Medical

33:02

Association is a cartel and

33:04

it's an illegitimate monopolistic organization,

33:07

basically. Underneath this

33:09

abstract economic argument, there are

33:11

a bunch of footnotes that

33:13

reveal Friedman is extremely

33:16

bothered by the AMA's decision

33:18

around 1938 to

33:21

suddenly require English for positions.

33:24

And he's like, why are they requiring this now

33:26

in 1938 when

33:28

a whole flood of Jewish doctors,

33:30

mostly speaking German, is coming to

33:33

the United States? So he already

33:35

sees the AMA as a cartel,

33:37

but then he adds extra layer

33:39

of it's an anti-Semitic cartel. And

33:42

it's using its idea of

33:44

licensure and assuming professional standards as

33:46

a cover for what he sees

33:49

is just very rank discrimination. So

33:51

even in the beginning, he's sensitive

33:53

of how efforts to kind

33:55

of structure markets can be used in exclusionary

33:58

ways. And that Jewish identity. is

34:00

really core to that. And what

34:02

happens at Wisconsin? So he does work

34:04

for the New Deal. It's like the only place hiring

34:06

and he can use his skills and he's happy to

34:09

do it. And then he gets offered a position

34:11

at the University of Wisconsin, which is

34:13

one of the top departments. It's

34:15

a little bit fallen on

34:18

its heels, but it's still a very

34:20

good offer. And so he goes and

34:22

pretty much right away he feels out of

34:25

step. And Wisconsin

34:27

still has a very heavy German

34:29

immigrant presence. German language is spoken

34:32

a lot. And he sort

34:34

of arrives and immediately starts telling everybody how

34:36

much he wants the United States to intervene

34:38

in the European war. And this is before

34:41

Pearl Harbor. This is before the United States

34:43

has entered the war. And Wisconsin is basically

34:45

a bastion of isolationism. And

34:47

so pretty quickly he feels out of step.

34:49

He feels discriminated against. He feels like the

34:51

only person who's friendly to him is the

34:54

one other Jewish faculty member and

34:57

then he makes a series of blunders. He

34:59

ruffles feathers. He writes a memo that basically

35:01

says everyone in this department is pretty dumb

35:03

and doesn't know what they're doing. And

35:06

so everybody gets very mad at

35:08

him and he ends up losing the job. And

35:11

there definitely seems to be a sense

35:13

in that him as a sort of

35:15

Jewish interloper coming in for at least

35:17

a segment of the faculty that was

35:19

meaningful to them. They felt like he

35:21

was an outsider and they wanted him

35:23

out. And so he

35:26

loses this job and has to kind of

35:28

lick his wounds and go back and end

35:30

up back in the Treasury Department and back

35:32

working for the federal government. I think it

35:34

might make sense now to sort

35:37

of describe what his main kind of

35:39

contribution is in the early part of

35:41

his career. As you say, when he

35:43

did his most important work, you know,

35:45

it's in opposition in some ways to

35:47

Keynesianism, the Keynesian consensus that he intervened

35:49

in. And the word that gets attached

35:51

to it is monetarism. And

35:53

they do tell us what that

35:56

is and how it fits into

35:58

these various tributaries of thought. that

36:00

he's absorbing. Yeah. So

36:02

I should just say when Freeman comes

36:04

out of Chicago, he's absorbed this monetary

36:06

financial interpretation of the Great Depression. He's

36:09

also absorbed the sort of political

36:11

economy of his teachers, Frank Knight

36:13

and Henry Simons, which we could

36:16

barely characterize as classical liberalism, a

36:18

belief in limited government, market allocation,

36:20

and a reduced state or

36:22

a state that works to enhance market

36:25

forces not to unduly structure them and

36:27

with a limited social safety net. So

36:29

that's kind of the political economy. And

36:32

he's training as a mathematical economist and

36:34

he's hired at the University

36:36

of Chicago. There's a great boom in

36:38

academic employment and he's published some important

36:41

papers in mathematical economics. And so he's

36:43

hired at Chicago as a kind of

36:45

rising young star. And

36:47

then he gets there and he really

36:49

changes course and starts studying money. And

36:52

it sounds strange to say that money

36:55

is an unfashionable topic among

36:57

economists, but in the

36:59

late 1940s, it really is

37:01

because there is a sense that money

37:03

is a veil that lies over

37:06

other more important economic forces. And

37:09

so nobody's really thinking of it as

37:11

having its own kind of agency and

37:13

power that is the quantity of currency

37:15

circulating. But Friedman has been

37:18

exposed to this different set of ideas that

37:21

it is really important and that the Great

37:23

Depression is not an episode of secular stagnation,

37:25

but is an episode of the sort of

37:27

banking system gone awry. And

37:29

so he is then working for the

37:31

National Bureau of Economic Research, which is

37:33

headed by his great old friend, Arthur

37:35

Burns. So he really wants to do

37:37

whatever he can to support Burns who's

37:39

trying to kind of bring NBR back

37:42

up to its glory days. And so Burns

37:44

gets the idea to match

37:46

him with a staff member NBR,

37:48

Anna Schwartz, who is working

37:51

on this question of money, which was very

37:53

important to the founder of NBR who had

37:55

just died. And he sort

37:57

of puts them together and Friedman

37:59

decides. let's measure how much money is

38:01

in the economy at various times. And

38:04

he doesn't really know much about economic

38:06

history at all. Schwartz has written a

38:08

huge book on the history of the

38:10

British economy. So she takes the lead.

38:13

And what they do is they literally

38:15

start measuring how much money

38:17

is in the economy, like decade by decade

38:19

since the Civil War. And Schwartz really takes

38:21

the lead here. She will add

38:24

up all these columns of figures. Like she will

38:26

go to different banks. She'll get banking reports. She'll

38:28

sometimes go to the bank and dig through the

38:30

archives, add up all the money. And

38:32

so eventually they're able to create this chart of

38:35

how much money is in the economy at

38:38

different times. And what

38:40

they find according to their

38:42

data is that simplifying here,

38:45

when there's more money, the economy does

38:47

better. In downturns, the quantity

38:49

of money is reduced. And most significantly,

38:52

they find that during the Great Depression,

38:54

the quantity of money in the United

38:56

States is reduced by 30%. So

38:59

basically a third of the money in

39:01

the United States is destroyed. And this

39:03

is because prior to bank insurance, if

39:05

a bank goes under, all of the

39:07

deposits that people have made just simply

39:10

vanish into thin air. So

39:12

fractional reserve banking set in reverse is like

39:14

an engine of destruction of money. And there

39:16

is no federal backstop. And what they argue

39:18

though is, wait a second, there was supposed

39:20

to be a federal backstop. There was supposed

39:22

to be the federal reserve system. And

39:25

the federal reserve system did

39:27

not take action. It just sort of stood there

39:29

as all these banks failed. And it wasn't proactive.

39:31

It didn't do any of the things that we're

39:33

supposed to do. So they really lay the blame

39:35

at the doorstep of the federal

39:38

reserve. So what this book does, it

39:40

creates a history of the United States

39:42

in money, showing the kinds

39:44

of ups and downs in money

39:46

and linking perturbances in economic life

39:48

to shifts and changes in the

39:50

actual quantity of money in the

39:52

economy. Now, they're able

39:55

to argue that these shifts

39:58

have a causal force. So it's

40:00

not just like, oh, the economy went down and therefore

40:02

money went down. They're able to argue that money went

40:04

down, therefore the economy went down. Money is no longer

40:06

a veil. It's kind of an act of force in

40:09

the economy. And so this

40:11

ends up being a real challenge

40:13

to Keynesianism because it sets up

40:16

another way to think about what's

40:19

going on in the economy. And it

40:21

sort of recenters focus on this

40:23

quantity of money in abstract

40:26

thing. And it refocuses

40:28

attention on the central banking system.

40:30

And what Freeman ends up arguing

40:32

is now we can see that

40:34

ups and downs in the economy are caused

40:36

by ups and downs in the money supply.

40:38

Therefore, in order to have

40:40

steady economic growth, we need steady growth

40:42

in the money supply. That's kind of

40:44

the core of monetarism. Quantity of money

40:47

matters. And in order to

40:49

have stable economic growth, there should

40:51

be stable growth in the supply of

40:53

money. And then Freeman will

40:55

kind of elaborate this there

40:58

should actually be a rule that

41:00

binds the Federal Reserve. And

41:02

the Federal Reserve should say, we're gonna grow the money supply

41:04

at 4% a year. Or

41:06

maybe even Congress should pass a law and say

41:08

Federal Reserve, you have to grow the money supply at 4%

41:10

a year. So again, Freeman,

41:13

when it comes to banking and financial

41:15

sector in some mode is actually in

41:17

favor of regulation. And what's so interesting

41:19

is in the 60s, he

41:22

becomes a partner in

41:24

crime with White Patman who is

41:26

a Texas populist Democrat

41:28

and like the number one public enemy

41:30

of the Fed. And Patman

41:32

loves Friedman because Friedman

41:35

also thinks the Fed

41:37

is like undemocratic, incompetent.

41:40

And Patman has this kind of populist

41:42

suspicion of banks. And it's

41:44

just fascinating that he ends up lining

41:46

up with Friedman, the sort of libertarian

41:48

free market champion who's also very suspicious

41:50

of banks. So they kind of have

41:52

this weird horseshoe theory where they

41:54

briefly meet and actually raise a lot of

41:57

ruckus in Congress and really like stress the

41:59

Fed out. because they're getting

42:01

this like pincher attack from both left and

42:03

right. I wanted to just ask here, we

42:06

associate Friedman with kind of the

42:08

neoliberal moment, right, the Montpelier and

42:10

Society meeting in the early 50s.

42:13

These people like Mises Hayek

42:15

and others. We know

42:17

Friedrich Hayek also taught at the University

42:20

of Chicago. What made Friedman

42:22

different from some of his also

42:24

famous libertarian brethren? What kind of

42:27

libertarian was he? In

42:29

the beginning of his career,

42:31

he is more open to government

42:33

intervention and to addressing questions

42:36

of poverty and inequality than Hayek. He's

42:39

a very early proponent of some version

42:41

of universal basic income. He's talking about

42:44

that at the Montpelier and Society. A

42:47

lot of other people at Montpelier are like, why are

42:49

you even bringing this up? He's like, this is really

42:51

important. We need to address questions

42:53

of poverty as we're

42:55

addressing questions of capitalism. We can't separate

42:57

them. Isn't that the Montpelier meeting

43:00

where Mises goes, you're all socialists and storms

43:02

out of the room? Exactly.

43:04

Exactly. Unlike Hayek and Mises,

43:07

Friedman engages in all the

43:09

new intellectual tools that are

43:11

being developed by economists. He's

43:14

able to argue with and

43:17

at times get the better of

43:19

other university economists, where Mises

43:21

and Hayek are just out of the

43:23

game and they sort of set up

43:25

a parallel intellectual world because they're still

43:28

doing 19th century economics, where Friedman is

43:30

more doing 20th century economics.

43:32

Then Friedman is both

43:35

a pragmatist and a purist. He's

43:38

willing to take half a loaf and

43:40

say, okay, let's take the steps we

43:42

can take right now. If

43:44

you look at what he would actually call for, it can be

43:47

extremely pure and extremely extreme.

43:50

One would be like, he's an advocate

43:53

of school vouchers, charter schools. If

43:55

you really press him on it, he'll be like, yeah, we

43:57

should not have public schools at all. Or,

44:00

you know, with licensure, he'll critique the

44:02

AMA and he basically eventually says, yeah,

44:04

I don't think doctors should need to

44:06

be licensed. You think the market should

44:08

be able to decide. So on

44:10

the one hand, when you take it all the way

44:12

to the end, you find yourself in a very pure

44:16

libertarian position. Yet

44:18

he's able to talk to

44:20

policymakers, propose solutions that are practical

44:22

and that work in reality as

44:25

it is now. So I

44:27

think that's one of the kind of secrets

44:29

when you're very pure in your belief and

44:31

your ideology, there's a certain power and clarity

44:33

to that. And he gets

44:36

that power and clarity, yet at the same

44:38

time, he's not pie in the sky because

44:40

he's willing to trim and he's willing to

44:42

take what he can get in the moment.

44:45

And so I think that combination makes him

44:47

very powerful. Now, comparing him to

44:49

Hayek is difficult because Hayek evolves

44:51

over time. On the one

44:53

hand, lots of things that Friedman gets

44:55

blamed for, sort of more Hayek type

44:58

of statements and ideas. On

45:00

the other hand, by the end of his

45:02

career, Hayek thinks we should have like competing

45:04

currencies and Hayek is more of the inspiration

45:06

for the kind of cryptocurrency Bitcoin

45:08

movement where Friedman is like, that's never

45:11

going to work. Everyone's just going to

45:13

devolve to one currency no matter what.

45:15

So from a certain libertarian standpoint, he

45:17

is a fake libertarian from the

45:20

anarcho-capitalist viewpoint. And from

45:22

the Austrian economic viewpoint, he's too

45:24

statist. So it's a mix. It's a

45:26

mix. And I honestly, I often

45:28

think that contradictions are actually very

45:30

powerful. You have more impact if

45:33

you're full of contradictions than if you make perfect

45:35

sense. Maybe this is a moment of

45:37

contradiction. There's something I wanted to just put a pin

45:39

in here that I just found to be an interesting

45:41

and maybe like symptomatic moment

45:43

that you point to in the biography, which

45:45

is in 1946 when

45:47

Friedman writes, the pamphlet, Roofs are

45:50

Ceiling with his friend

45:52

George Stigler. The thing that I

45:54

was really interested in was the

45:56

conflict this little pamphlet set off

45:58

because basically the people. who contracted

46:01

them to write it, the Foundation

46:03

of Economic Education, wanting them to

46:05

cut references to inequality and measures

46:07

to improving equality from the pamphlet,

46:10

which really pissed Friedman off. Yeah,

46:12

this, I think, is such an important

46:14

episode in the history of the conservative

46:16

movement. It's a small micro

46:19

history. So during the war, there

46:21

are a huge number of wartime

46:23

regulations, price controls in all kinds

46:25

of sectors, including rent control is

46:27

instituted in many states and cities.

46:30

Then there's a housing shortage, as all the veterans

46:32

come back, there's a housing shortage. And so then

46:34

there's a political debate, like what should we do

46:36

about all these wartime controls, including rent control? Should

46:38

they be repealed? Should they be continued? And so

46:41

Friedman and Figgler say, what we really

46:43

need to do is provide some economic

46:45

analysis. And we need to point out

46:47

that if you need more housing, you

46:49

shouldn't restrict the price because

46:52

the landlords won't want to build more housing if they

46:54

can't get enough money for it. And

46:56

so you're restricting the price and you're limiting

46:58

the supply. And this is like the wrong

47:00

way to go about trying to increase housing

47:02

supply. So that's one efficiency based argument. At

47:04

the same time, they say like, sure, this

47:07

is efficient, but actually, it's also

47:09

going to help us get more equal housing

47:11

for everybody, even though people think rent control

47:13

is what creates equal housing, it's created a

47:16

housing shortage. So there's an

47:18

argument for this on equity as well.

47:20

And so they are writing in the

47:22

mode of depression era Chicago that is

47:25

very concerned about the economic crisis. And

47:27

they're very much echoing the philosophy and

47:29

ideas of Henry Simons. He's a very

47:32

important mentor of Friedman. And

47:34

they first write the pamphlet, they wanted to be published

47:36

in like the New York Times or some mainstream outlet.

47:38

Nobody's interested in this at all. But they

47:40

find this new group, the Foundation for Economic

47:42

Education, which is like one of the first

47:45

kind of startup right wing think tanks. And

47:48

they say, great, we'll publish it. And

47:50

then they get the pamphlet and they

47:52

don't like this invocation of equality. And

47:55

they say, we're going to take that out. And

47:57

Freeman and Stigler say, no, no, no, you have to leave that

47:59

in. And they kind of go

48:01

back and forth, back and forth. And

48:03

in these letters, you have these

48:05

officials from the Foundation of Economic

48:07

Organizations saying, we don't want to

48:09

argue about equality. We want to

48:12

defend capitalism. And we don't want

48:14

to say you're defending capitalism because

48:16

it brings equality. Like

48:18

they are social Darwinists, full stop.

48:21

And as I look at it, this is like an older

48:24

version of conservative economic

48:26

thinking and conservative ideas. And it's

48:28

dark and it's kind of 19th

48:30

century. And Freeman and Stigler

48:33

want nothing to do with it. And in fact, they

48:35

want to push that type of logic away and introduce

48:38

a new type of logic, which

48:40

uses the science of economics, but

48:42

also incorporates social concerns, safety,

48:45

net, equity, equality. And so

48:47

anyhow, the Foundation for

48:49

Economic Education agrees, OK,

48:51

fine. And then without telling

48:54

Freeman and Stigler, they put a footnote.

48:56

Freeman and Stigler say something like, oh, and this

48:58

like this will create more equality. And then the

49:01

Foundation puts a footnote that's basically like, yeah,

49:03

but even if you don't care about equality,

49:05

like it's fine. And

49:08

then they do a massive printing that's

49:11

going out, probably as part of political

49:13

lobbying campaign, and they cut the entire

49:15

paragraph without telling Freeman and Stigler. And

49:17

so they're just curious. We

49:19

have to add, there's another subplot going

49:22

on here, which is that Ayn Rand

49:24

is also working with the Foundation for

49:26

Economic Education and believes that she is

49:29

going to be a sort of gatekeeper

49:32

and also like them has kind

49:34

of a social Darwinist unregulated capitalism,

49:36

you rise and fall on your

49:38

merits and your talents. And

49:40

when she sees this pamphlet, she

49:43

thinks this is written by communists because

49:46

they are using an efficiency and

49:48

an equity argument. And she sees

49:50

this as a way of kind

49:52

of disarming opposition and kind

49:54

of smuggling in like, sure,

49:57

today you say take away rent control. Tomorrow

49:59

you say. nationalize everybody's house,

50:01

right? She gets so

50:03

mad that there's basically a blow up.

50:06

And so the foundation for economic education

50:08

is on the out with Ayn Rand

50:10

for being communist and on the outs

50:13

with Friedman and Stigler for being opposed

50:15

to, you know, their egalitarian sentiments. And

50:18

so to my mind, it's just shows conservatives

50:20

are trying to figure out how to talk

50:22

about economics in the wake

50:24

of the New Deal, in the wake

50:26

of the rise of Keynesian economics. They're

50:29

trying to figure out their ethics. Like

50:31

how do you defend capitalism without saying

50:33

only the strong survive and the weak get what

50:35

they deserve? And Friedman does not want to say

50:37

that. He really does not, but he doesn't know

50:39

how to not say it yet. He's trying to

50:41

figure that out. Yeah, it's very

50:44

interesting to see them on opposite

50:46

sides of that debate about how

50:48

to talk about the appeal of

50:50

this sort of free market ideology,

50:52

because really Friedman obviously wins. It's

50:54

much better to talk about the

50:56

free market as this engine

50:58

of upward lift for

51:00

all people as opposed to like

51:03

insisting on saying, no, the

51:05

free market is like a coliseum where

51:07

the strong fight it out to win

51:09

and come out on top and the

51:11

weak fall. I mean, which is

51:13

like that current in libertarianism and in

51:16

conservatism exists, of course, and it persists.

51:18

But especially as we move

51:20

into the 1950s, of course, like Friedman

51:22

sort of message of like, of course,

51:24

we support free markets because they're efficient,

51:26

but also because their moral is

51:28

so much better even just as propaganda. Yeah,

51:31

and it's interesting how deeply people

51:33

believed it to the extent that

51:35

they couldn't register. This isn't

51:37

going to be a successful argument in the

51:39

public square. It's just not. You

51:41

mentioned that there was sort of a

51:43

sense that there was a sort of

51:45

lobbying campaign that encouraged FBE to put

51:47

out this pamphlet in its edited non-egalitarian

51:49

version and that it had something to

51:51

do with the National Association of Real

51:53

Estate Boards, that they were just kind

51:55

of like contracted to do this to

51:57

help this special interest. And that

52:00

all. It wasn't something that Friedman liked and

52:02

then later on he wrote about what he

52:04

wanted for some future endeavor and he'd mentioned

52:06

that he didn't want to do any hack

52:08

work, quote unquote hack work. The

52:11

other thing about this episode that it made me

52:13

think about was like, did this anger stay

52:16

with him, this anger of having

52:18

his ideas be used for like

52:20

sort of propaganda purposes

52:23

by privately motivated interests?

52:26

Because in some ways later on I think

52:28

he loses sight of how his ideas might

52:30

be used by

52:32

people who don't maybe share his whole

52:34

philosophical vision but basically just want you

52:37

know, unfettered capitalism for the benefit of

52:39

particular business interests. Like I

52:41

kind of see this version of Friedman in this moment

52:43

who would be a little bit more protective

52:47

of the integrity of these ideas

52:49

than he may have let his guard

52:51

down later on his career. Yeah, I think you're right.

52:53

I mean, I think part of it is

52:55

he's starting out as a young scholar

52:58

and he wants to control the message

53:00

and he's very afraid that the wrong message

53:02

is going to get out and he can

53:04

never recover from that. And

53:06

in this case, he feels it's a

53:08

mistake to not incorporate this kind of

53:11

egalitarian tint. And

53:13

also in 1940s, he's starting to work with

53:15

organized conservatives because this is not a really

53:17

strong identity for him, I would say. Over

53:19

time, he becomes more committed to, I'm

53:22

kind of part of this team and there's

53:25

this other team out there that's different.

53:27

And so you'll get to the point

53:29

when he's commenting on supply side economics,

53:31

he'll be like, there's no

53:33

way this is going to work. Like it's

53:35

a crazy idea, it doesn't make any sense,

53:37

but it might shrink government and therefore I

53:39

can support it. You know, so later I

53:41

think he gets in a coherent movement that's

53:43

opposed to another coherent movement. And

53:46

so, you know, in 1946, the state has grown enormously

53:48

in the course of the war. Nobody

53:50

really knows what's going to happen next. Are we

53:52

going to have a giant and second grade depression?

53:55

Is the state going to continue to grow at this rate? Is

53:57

it going to retrench? you

54:00

get to the late 60s and

54:02

70s and particularly after the Nixon

54:04

administration, Freeman comes to conclude that

54:07

the dynamic of the federal government is

54:09

growth and expansion and that

54:12

any politician, no matter what they say, is

54:15

going to be swept up in that dynamic

54:17

when they get into office. And therefore, I'm

54:19

going to just pull out all the stops

54:21

and just be opposed as much as I

54:23

can to any growth because I'm fighting this

54:26

like tidal force and I

54:28

have to be much more aggressive. So I think the

54:30

passage of time plays a role there. It

54:32

becomes a team player. Yeah. Well, speaking of

54:34

teams, I thought one of the really interesting

54:36

aspects of your biography is the role he

54:39

played as kind of an institution builder at

54:41

the University of Chicago. We call it the

54:44

Chicago School that had to be

54:46

made and forged and funded. One

54:48

thing we like to do on

54:50

the podcast is kind of note

54:52

the infrastructure and institutions and pipelines

54:54

of money and talent on the

54:56

right. Could you just, because the

54:58

Volcker Fund appeared again and again

55:00

in your book, what was the

55:02

Volcker Fund and kind of how did it

55:05

fund the various projects that Freeman and

55:07

others had at the University of

55:09

Chicago? Yeah, the Volcker Fund is fascinating.

55:12

Actually, it would be a good study just

55:14

on that alone. So it

55:16

starts with a furniture business

55:18

in Kansas City. It's a

55:20

charity that originally is supposed

55:22

to support local initiatives. Then

55:25

the founder of the business passes

55:27

control of the charitable foundation to

55:30

his nephew, Harold Luthnow. Luthnow

55:32

is one of the many small businessmen

55:34

in America who reads Friedrich Hayek's Road

55:36

to Serfdom when it's published in 1946. I

55:38

don't know if he actually

55:41

reads the whole thing or he reads

55:43

the Reader's Digest or the pamphlet, but

55:45

he swept away by this argument. Hayek's

55:48

argument that unless we change course,

55:50

the federal government will grow and

55:52

grow and grow and sort of

55:54

recreate all the dangers and pitfalls

55:57

of totalitarianism. Hayek

55:59

basically says, there will be no democracy if the

56:01

state continues to grow. That lands in

56:03

the United States right when people

56:06

are trying to decide. There's a debate about

56:08

what should happen to the wartime government, like

56:10

what should happen to the wartime regulations, the

56:12

rent control. And so it is translated into

56:14

the American context as a sort of defense

56:16

of the small business owner who's

56:19

feeling put upon by New Deal regulations and

56:21

all the interventions that have happened over the

56:23

course of the New Deal. And so many

56:25

of them love this book and take it as gospel and use it

56:28

to kind of push their own political

56:30

agenda. So Love Now gets this book.

56:32

He then goes to see Hayek speak

56:34

and he says, I want you to

56:36

write basically a popular version of it

56:38

for the United States. And

56:40

so Hayek's like, oh, very interesting.

56:42

And he basically keeps Love Now

56:44

talking well enough to say, sure,

56:47

we could do a book, but what we really need to

56:49

do is to study the conditions in the United States, to

56:51

research them and understand them, to sort of make a

56:54

plan to go forward. And I could direct a project

56:56

like this and I could direct it at the University

56:58

of Chicago. And in the

57:00

meantime, he's got Henry Simons working

57:02

the administration. Simons is best friends

57:04

with Aaron Director, who is Milton

57:06

Friedman's wife's brother. And they all

57:08

went to graduate school together. They're

57:10

very close. Sounds like a lot

57:12

of fun hanging out with those folks. A

57:14

lot of nerdy econ jokes, I

57:16

would say if you like nerdy econ

57:19

jokes, this would be a hot spot.

57:21

So they sort of concoct this whole

57:23

scheme and Hayek is another institution builder

57:25

par excellence. And he also wants himself

57:28

to get to the United States. So he can get

57:30

a divorce and marry his cousin. Yes, it

57:34

really never ends. So long story

57:36

short, they get all this funding for what's

57:38

going to be an Institute of Political Economy

57:40

at Chicago. And it's going to bring everybody

57:42

back. The band's going to get back together.

57:44

Along the way, there's a hiccup in the

57:47

funding. And that seems to be the episode

57:50

that plunges Henry Simons into a

57:52

suicidal depression from which he does

57:54

not emerge. And so

57:57

Simons kills himself. Director is

57:59

eventually hired to Chicago at the

58:01

same time that Friedman is hired to

58:03

Chicago. So they basically arrive and they're

58:05

given this project that Simons and

58:07

Hyatt cooked up, but Simons isn't there and so

58:10

they don't really know what to do with it.

58:12

They're supposed to have these meetings and

58:15

they're figuring out what to do, and

58:17

eventually, director gets back on his feet

58:19

and they use it to fund

58:21

some studies of monopoly from graduate

58:24

students. Eventually, director gets Hyatt to

58:26

come and take up a position

58:28

at the University of Chicago, not

58:30

in the economics department. Friedman did not want

58:32

him in the economics department, so he doesn't

58:34

really think Hyatt is a good economist, although

58:36

he shares his political values.

58:39

So Hyatt shows up and

58:41

eventually figures out that Aaron Director

58:44

has become a very effective teacher

58:46

at the University of Chicago Law

58:48

School, and he's become particularly effective

58:50

at introducing economic analysis and the

58:52

free market critiques to law students.

58:56

He's supposed to be writing

58:58

this popular Americanized road to surf

59:00

dome, like they eventually convince the

59:02

funders to pay directors to write

59:04

this book. Director can't write a

59:06

damn thing. He never finishes dissertation.

59:08

He publishes one article. So

59:11

Hyatt shows up and basically figures out this is never

59:13

going to happen, but directors doing

59:15

good work and over the next couple

59:17

of years, convinces the fund instead

59:20

of trying to get this book,

59:23

instead they should underwrite the training

59:25

of economics at the

59:27

University of Chicago Law School. So

59:31

director ends up with a

59:33

journal and with fellowships, and

59:35

with the ability to hire

59:37

and cultivate and train. I

59:40

should say similar intellectual movement

59:42

is happening at other law

59:44

schools, not funded by

59:47

the Volcker Foundation, which is this

59:49

very ideological libertarian focus, but there's

59:51

also a law and economics movement

59:53

at Harvard. There's a couple other

59:55

places because economics is a

59:58

rising discipline. A lot of other disciplines

1:00:00

are finding it useful to kind of bring these

1:00:02

tools in. But the vocal

1:00:05

money really establishes this very strong

1:00:07

beachhead at Chicago that then has

1:00:09

the force multiplier of Friedman being

1:00:11

in the economics department, Hayek

1:00:13

teaching in the committee on social

1:00:16

thought. So doing kind of more

1:00:18

philosophical seminars. Eventually, Alan Wallace,

1:00:20

who's another friend of Friedman's from grad school ends

1:00:22

up at the business school, then George Stigler ends

1:00:24

up at the business school, like the whole band

1:00:26

gets back together. They're all in Chicago, and that

1:00:29

is really where they start doing

1:00:31

this thinking about how do we develop

1:00:33

the case for capitalism in the second

1:00:35

half of the 20th century? Like how

1:00:37

do we respond to the growth in

1:00:39

the state? How do we respond to

1:00:41

the New Deal institutions and ideas

1:00:43

that have now really become

1:00:46

part of the American landscape? And so, law

1:00:48

and economics will be one answer to those

1:00:50

questions. Because we want to get

1:00:52

to some like signal moments in

1:00:54

his sort of public career and maybe

1:00:56

how he's remembered and maybe especially remembered

1:00:59

less fondly by the left. I think

1:01:01

we should move on to I think

1:01:03

the civil rights moment. And maybe the

1:01:05

way to get into this is

1:01:07

to talk about Friedman and Goldwater. Of

1:01:10

course, their bond was not solidified over their

1:01:12

opposition to civil rights or anything like that.

1:01:15

They probably shared a kind of sense of

1:01:17

being opposed to racial segregation in their

1:01:20

personal lives, but saw federal

1:01:22

action as infringing on liberties

1:01:24

that they held dear, including the

1:01:26

liberties of people who are racially

1:01:28

prejudiced. But before we

1:01:30

start talking about Friedman's response to the

1:01:33

civil rights moment, what attracted Friedman to

1:01:35

Goldwater in the first place? So

1:01:38

I think Friedman saw

1:01:40

Goldwater as potentially a

1:01:43

kind of voice for the ideas that

1:01:45

he thought were important. The first letter

1:01:47

he ever writes to Goldwater is a

1:01:50

criticism. It's about capital control. So in

1:01:52

order to maintain the quasi gold standard

1:01:54

of the mid century, you couldn't just

1:01:56

take whatever money you wanted out of

1:01:59

the country. to register back and forth.

1:02:01

And so Friedman sends Goldwater this letter and says,

1:02:03

like, you're a fellow defender of free enterprise, so

1:02:05

why are you supporting these capital controls? Because this

1:02:07

is a way for the state to control its

1:02:09

citizens. Goldwater kind of blows them off.

1:02:12

And Friedman, I'm guessing, has read A Conscience of

1:02:14

a Conservative, which comes out in 1960. And

1:02:17

he's probably gleaned enough of the

1:02:19

libertarian flavor of that book to think that

1:02:21

this could be someone of interest. But

1:02:23

he doesn't know that actually, Brent Bozell wrote that book.

1:02:25

Right. He doesn't know. He doesn't know. And

1:02:28

I mean, the other thing I will say

1:02:30

is that Friedman has the ability, as we

1:02:32

talked about before, say he did read A

1:02:34

Conscience of a Conservative. He pulls out the

1:02:36

libertarian message and he doesn't get caught up

1:02:38

in the kind of more traditional values,

1:02:40

invocations, in a way that, say, Ayn Rand

1:02:42

would be frustrated by that, you know. So

1:02:45

they have this perfunctory exchange of

1:02:47

letters. And then Goldwater suddenly is

1:02:49

he starting to run for office

1:02:51

and Friedman has become known

1:02:53

as a public figure with the monetary

1:02:55

history. Suddenly it's very warm and really

1:02:58

wants to reconnect with him. And so

1:03:00

that's how they get connected. But I want

1:03:03

to just back up before we jump into

1:03:05

Goldwater and just say one theme that's really

1:03:07

important that I think adds a wrinkle to

1:03:09

the Friedman Goldwater episode is that in the

1:03:12

1950s and the early 1960s, Friedman really considers

1:03:16

himself as a warrior against what

1:03:18

he calls the crackpot conservatives of

1:03:20

the radical right fringe. And that means for him

1:03:23

in the 1950s McCarthy

1:03:25

and what he calls a McCarthy

1:03:27

McCormick wing of the Republican Party.

1:03:30

And so he sees in them

1:03:32

a continuation of anti-Semitism, isolationism, and

1:03:35

he's really argues vociferously against that

1:03:37

wing. And he sees himself as

1:03:39

an alternative. In the 1960s, it's

1:03:41

the John Birch Society, which uses

1:03:43

conspiratorial, populist, and he makes his

1:03:45

first overtures to William Buckley when

1:03:48

Buckley, you know, criticizes the Birch

1:03:50

Society. So Friedman's really consciously

1:03:52

trying to set himself up as a different

1:03:55

type of conservative and trying to push out

1:03:57

this sort of darker

1:03:59

anti-Semitic. conspiratorial sides of

1:04:01

the right. He's kind of trying to

1:04:03

rebrand conservatism around a University of Chicago

1:04:05

economics professor, you know, credentialed, pleasant, smiley,

1:04:08

friendly. And I just want to say

1:04:10

all that because that sort of breaks

1:04:12

down when he gets to Goldwater and

1:04:14

civil rights. And that's why I think

1:04:17

it's really significant and also maybe

1:04:20

not predictable. It comes up

1:04:22

even before Goldwater is running

1:04:25

for president in 64 in this

1:04:27

book that Rose Friedman compiles from

1:04:29

lectures and other kind of ephemera

1:04:32

that Friedman has put down in

1:04:34

the 1950s called Capitalism and Freedom in

1:04:36

1962. They do address the civil rights moment.

1:04:41

Could you just sort of characterize

1:04:43

for us what Friedman's position on

1:04:46

civil rights legislation was at

1:04:48

that moment? So he

1:04:50

will always start with a kind of

1:04:53

ritual invocation that he's not

1:04:55

prejudiced, that prejudice is wrong.

1:04:57

And then he will basically

1:05:00

move to a sort of

1:05:02

market analysis of prejudice. And

1:05:05

in large part, he's drawing on the

1:05:07

work of Gary Becker, who is his

1:05:09

most famous and accomplished graduate student. And

1:05:12

Becker analyzes discrimination in terms

1:05:14

of taste and in terms

1:05:17

of price. And so the

1:05:19

Freedmen's basically say, well, discrimination

1:05:22

is a taste. And

1:05:24

if you're going to go in the

1:05:26

market and be motivated by this taste,

1:05:28

you're going to pay a price, which

1:05:31

is that you are going to

1:05:33

suffer because you're basing your decisions

1:05:35

on this illogical taste instead of

1:05:37

what is the most suitable

1:05:40

person for the job or the best business

1:05:42

decision. And so you'll pay a price for

1:05:44

it. That's kind of the sanction. And

1:05:48

the hope seems to be that over

1:05:50

time, people will conclude that racism

1:05:52

isn't a price they want to pay. And

1:05:55

that will be the mechanism for it to

1:05:57

be eliminated. And it sounds like highly

1:06:00

implausible. So I guess part of what I

1:06:02

think is like, well, how did he think

1:06:05

this is plausible? And I think part of

1:06:07

it comes back to his Jewish identity again.

1:06:09

This is a man who has lived through

1:06:11

a time when Jews would not be hired

1:06:13

as university professors. And lo and

1:06:15

behold, he's now a tenured professor at

1:06:18

Chicago. So the reason Arthur Burns was

1:06:20

teaching him at Rutgers is because nobody

1:06:22

was gonna hire Arthur Burns before World

1:06:24

War II as a professor of economics.

1:06:26

After World War II, Burns is a

1:06:29

professor, a tenured professor at Columbia. So

1:06:31

he's seen this, what he thinks of

1:06:33

as a sort of market mechanism where

1:06:35

American academia concludes it doesn't make sense

1:06:38

to discriminate against Jewish intellectuals. And so

1:06:40

that's kind of his model. I don't

1:06:42

think it's it maps well. I don't

1:06:44

think it's realistic. To the Black experience?

1:06:47

Right, does not match to the Black experience.

1:06:49

I think that's it's not an uncommon trajectory

1:06:51

for even much more

1:06:53

liberal-minded Jewish intellectuals of the 20th

1:06:55

century who said, well, the Jews

1:06:58

made it in America, why shouldn't

1:07:00

the Blacks? And that's just a

1:07:02

total elision and sort of a

1:07:04

historical way of understanding completely different

1:07:06

trajectories and not justifiable, you know,

1:07:08

as an intellectual exercise, but understandable

1:07:10

as a sort of personal fixation.

1:07:13

Like, I made it, why don't you just

1:07:15

make it the same way we did? And then

1:07:17

it gets the gloss of this economic analysis

1:07:20

on top of it. And I mean, Simmons

1:07:22

is not a historian. He hasn't really spent

1:07:24

a lot of time in the segregated South.

1:07:26

He hasn't thought deeply about these questions. And

1:07:28

so basically they just take

1:07:30

Becker and they summarize Becker's dissertation in

1:07:33

like five pages and they kind of

1:07:35

move on. Can I read from

1:07:37

how they summarize Becker's position from the

1:07:39

book? You have a quote that I

1:07:42

think really it does

1:07:44

just underscore how ill-equipped

1:07:46

this way of thinking about discrimination

1:07:48

was to the actual problem of

1:07:50

racial prejudice and anti-Blackness in America.

1:07:53

This is the quote from Rose

1:07:55

and Milton Friedman, meaning

1:08:00

other than a taste of others that one does

1:08:02

not share. Is there

1:08:04

any difference in principle between the taste that

1:08:06

leads a householder to prefer an attractive servant

1:08:08

to an ugly one and the taste that

1:08:10

leads another to prefer a negro to a

1:08:12

white or a white to a negro except

1:08:14

that we sympathize and agree with the one

1:08:16

taste and may not with the other? Even

1:08:20

on its own terms to be like,

1:08:22

well, some people like pretty servants and

1:08:24

that's acceptable, but some people

1:08:26

prefer white or prefer black servants and

1:08:28

that has to be acceptable too. It

1:08:31

really just does to our contemporary

1:08:33

era seem myopic along many different

1:08:35

dimensions. Yeah. What's interesting when Friedman

1:08:38

connects with Goldwater is, first of all,

1:08:40

it's kind of a tenuous connection. The

1:08:42

Goldwater campaign is pretty disorganized. They don't

1:08:44

really have an official agenda.

1:08:47

And basically the media starts figuring out

1:08:49

that Goldwater and Friedman talk, therefore Friedman

1:08:52

is some type of representative of Goldwater.

1:08:54

There's not any real coordination as one

1:08:56

might expect in the kind of modern

1:08:58

political campaign. But what's really interesting

1:09:00

is that Friedman starts going out of his way to

1:09:03

explain Goldwater's stance on civil rights

1:09:05

and specifically Goldwater's opposition to the

1:09:08

pending bill in 1964, which is

1:09:11

passed, the Civil Rights Act, which

1:09:13

will outlaw using the interstate commerce

1:09:16

clause, will outlaw discrimination in public

1:09:18

accommodations, restaurants, segregated bus

1:09:20

stations, different water founts, all of that

1:09:22

will be swept away. And

1:09:25

Goldwater opposes that because he

1:09:28

fears, as he says, it will create a,

1:09:30

quote, police force of mammoth dimensions or something

1:09:32

like this. And Friedman just

1:09:34

picks up this baton and starts talking about

1:09:36

it. And he really doesn't need

1:09:38

to. He's the economic

1:09:41

advisor. There's many other things he could

1:09:43

talk about. He could talk about taxes.

1:09:45

He could talk about free trade, everything.

1:09:47

The civil rights bill is not really

1:09:49

in his wheelhouse, but he brings it

1:09:51

up in his speeches anytime.

1:09:54

So it's clearly something he cares about

1:09:57

and wants to share his views

1:09:59

on. I mean, there's that amazing

1:10:01

passage you point to when he

1:10:03

compares race neutral hiring laws, the

1:10:05

Fair Employment Practices Committee, which sort

1:10:07

of prefigured anti-discrimination laws

1:10:10

to the Nuremberg Laws. I just,

1:10:12

I really, I still haven't been able to

1:10:14

figure out the connection there. It seems

1:10:16

to be something like

1:10:18

if you're identifying black

1:10:21

Americans as needing some kind of special

1:10:23

help from the government, then you're implying

1:10:25

that they're somehow deficient in

1:10:27

the way that the Nuremberg Laws

1:10:30

explicitly define Jews as deficient. But

1:10:32

it beggars belief and credulity

1:10:34

to suggest that Nuremberg Laws

1:10:36

designed to disenfranchise Jews are

1:10:39

the same as laws that

1:10:41

are designed to enfranchise black

1:10:43

Americans. Yeah, I mean, I think the

1:10:45

only way you could connect it is just

1:10:47

I think he believes that law should be

1:10:49

universal. And if you start targeting towards any

1:10:51

type of ethnic group, maybe that to him

1:10:53

is like the beginning of the slippery slope.

1:10:56

But it's not really, I mean, it's convoluted,

1:10:58

all of it's convoluted in capitalism and freedom,

1:11:00

and they're moving very quickly, treating these

1:11:02

issues with great superficiality, I would say. I

1:11:04

mean, perhaps related to this is the

1:11:06

school vouchers moment here, where, of course,

1:11:08

it's been something that he advocates for

1:11:10

people being able to take

1:11:13

the money from the state that would go to their kids

1:11:15

public schooling and use it to put them in a private

1:11:17

school. This policy solution

1:11:19

gets taken up really actively

1:11:21

by segregationists once school integration

1:11:24

is a federal policy. You know, that wasn't

1:11:27

his intention with the policy, but it did

1:11:29

happen. And it's not

1:11:31

clear to me that he ever sort of said, well, this

1:11:33

is what I hoped would happen. No,

1:11:35

he doesn't. In fact, he comes to endorse

1:11:37

it. And you can see that in the footnotes in

1:11:39

capitalism and freedom. And there's also a whole correspondence. There's

1:11:41

someone who's editing this piece for publication and kind of

1:11:44

is like, hey, do you want to change anything because

1:11:46

of what's happened? He's like, no. And they

1:11:48

go back and forth and back and forth. And

1:11:50

he's aware that Southern segregationists are taking

1:11:52

up the reform and he

1:11:55

says nothing against it. The

1:11:57

closest he comes, he basically manages to choke out. I'm not

1:11:59

a student. segregationist. And,

1:12:01

you know, I'd rather have integration than not have integration.

1:12:04

But it's very begrudging. They're both

1:12:06

evils. Forced segregation and forced integration

1:12:08

are both evils. Yeah. And

1:12:10

then he's saying, you know, well, maybe it'll

1:12:12

underwrite a universe where there'll be integrated schools

1:12:14

and all black schools and all white schools,

1:12:16

and that would be fine. And

1:12:18

just kind of stepping back, I feel like this

1:12:21

is a really important moment. And it's not just,

1:12:24

hey, this Jewish guy born in 1913

1:12:26

was bigoted in a way that we

1:12:28

aren't today. I mean, sure. But

1:12:31

there's a contest and an argument

1:12:33

going on reciprocally and viciously in

1:12:35

the 1960s between moderate Republicans who

1:12:38

are the most efficacious defenders of

1:12:40

civil rights. They introduce the legislation.

1:12:42

They have the votes. Because at

1:12:45

this point, the Democrats are captured

1:12:48

by the southern wing of the party.

1:12:50

And there are some supporters of civil

1:12:52

rights, but there's many more southern Democrats

1:12:54

who are arch segregationists. And so there's

1:12:57

this real fight going on between

1:12:59

moderate Republicans and between the Goldwater

1:13:01

forces. And in the end of

1:13:03

the day, it's the Goldwater activists

1:13:06

who win. And they win because they

1:13:08

fight really dirty, and they push moderates

1:13:11

out and they take over the civil

1:13:13

rights issue and they make opposition or

1:13:15

go slow on civil rights, the

1:13:18

signature Republican stance when it had

1:13:20

been the opposite before. And so

1:13:22

you see Friedman, this sort of

1:13:24

most powerful intellectual figurehead, he casts

1:13:26

his lot with the Goldwater forces

1:13:28

and with those who are saying

1:13:31

civil rights is not a Republican issue. And

1:13:33

so for me, this is really

1:13:35

consequential. I'm not saying that one man makes

1:13:37

all the difference, but you imagine if Friedman

1:13:40

said, no, I'm a moderate Republican

1:13:42

and civil rights has been a part

1:13:44

of the Republican platform forever, and it

1:13:46

should stay. And here's how we can

1:13:48

make it compatible with individual freedom. He's

1:13:50

a very powerful, argue or an advocate.

1:13:52

And so for me, this is just

1:13:54

a huge missed opportunity. It's

1:13:57

a loss. It's a tragic decision.

1:14:00

And it's also out of line

1:14:02

with his earlier efforts to fight the

1:14:04

birchers, to fight McCarthy. And so I

1:14:06

feel it's very consequential and a place

1:14:08

where things could have fallen out a

1:14:11

different way that I think could

1:14:13

have led us to a better place overall. I mean,

1:14:15

Jennifer, I want to push you on this a little bit.

1:14:18

Do you think this was kind of a representative

1:14:21

intellectual mistake by Friedman? Meaning,

1:14:23

when you think about even his style

1:14:26

of economics, I was struck by your

1:14:28

line on page 45 of the book,

1:14:31

there was something distinctive about Chicago

1:14:33

price theory. Students often

1:14:35

greeted as revealed truth, describing their

1:14:37

encounter as a conversion experience. There

1:14:39

was for many a clear dividing

1:14:42

line before price theory and after.

1:14:45

And do you think there's something kind of like abstract

1:14:47

about this mode of economic reasoning

1:14:49

that like, sure, we can apply

1:14:51

price theory to racism, you

1:14:54

know, and segregation and things like

1:14:56

that, that it was kind of

1:14:58

a sin of over intellectualism and

1:15:01

kind of rendering these visceral experiences

1:15:03

that many Americans faced in

1:15:06

the kind of tidier language of economics? I

1:15:09

think there's a lack of historical

1:15:11

context and a lack of

1:15:13

moderating in this particular way.

1:15:16

I guess I find it constructive to kind of

1:15:19

contrast him with the case of George Shultz,

1:15:21

who is someone who's actually educated

1:15:23

at MIT, but he comes to Chicago and he becomes

1:15:25

very close to Friedman and they will be politically close

1:15:27

for the rest of their lives. You

1:15:30

know, so Shultz has all the same

1:15:32

free market orientation that Friedman has, but

1:15:34

he spent time in the South and he's done

1:15:36

these labor negotiations where the black members of his

1:15:39

team are not allowed to stay in the same

1:15:41

hotel. And so he emerges

1:15:43

as a supporter of affirmative action. He's like,

1:15:45

look, we need to do something different in

1:15:47

this case. And so he's able to kind

1:15:49

of set aside whatever abstract principles

1:15:51

about freedom from government interference that he would

1:15:53

hold to in other cases and say, this

1:15:55

is different. And Friedman doesn't do that. I

1:15:57

don't think he's really able to do that.

1:16:00

And it twists him up. He ends up

1:16:02

coming to these very strange conclusions. So there's

1:16:04

a series of letters he writes. He is

1:16:06

convinced his son is being discriminated against. And

1:16:08

so he's kind of trying to rectify the

1:16:10

situation. Even as he's doing that, he says,

1:16:12

I don't question the right of people to

1:16:14

be anti-Semitic. You know, just you shouldn't do it

1:16:16

in this particular group. Just don't do it to me or my

1:16:18

son. Right. Just don't do it to

1:16:21

me or my son. I do think

1:16:23

it is a representative intellectual mistake. It's

1:16:25

part of the power, having an abstract

1:16:27

system, that you can subsume so much of human

1:16:29

experience and you can have these insights into it,

1:16:31

but you can also miss so much. And I

1:16:33

think this is sort of a clear case of

1:16:35

that. Yeah. Well, speaking

1:16:37

of what I consider to be another

1:16:39

representative intellectual mistake, I

1:16:41

thought your chapter on Freeman in

1:16:44

Chile was super interesting. A

1:16:46

lot of our listeners may sort of have

1:16:48

in their mind the idea of like the

1:16:51

Chicago boys in Chile sort

1:16:53

of architects of the coup against the

1:16:55

Yende, installing this dictator Pinochet, and that

1:16:57

Milton Friedman is right at the center

1:16:59

of this. I think your book is

1:17:02

somewhat of a correction to

1:17:04

that narrative. Yeah. So I

1:17:07

ended up doing basically a chapter on

1:17:09

this because I wanted to kind of

1:17:11

dig into the backstory and set up

1:17:13

the context because Friedman's life does become

1:17:15

caught up in this bigger 20th

1:17:18

century conflict of socialism versus capitalism

1:17:20

or communism versus capitalism, U.S. power,

1:17:23

imperialism, all of that. So I really wanted to

1:17:25

kind of lay out the background. And it is

1:17:27

a bit of a corrective just because there has

1:17:29

been a lot of misinformation about what Freeman's role

1:17:31

was. So briefly put, there's

1:17:34

a long standing connection between

1:17:36

universities in Chile and the economics

1:17:38

department at Chicago. And it was

1:17:41

set up by some interested faculty

1:17:43

funded by U.S. government

1:17:45

funds. They did a lot of work in

1:17:47

many different areas to kind of generate knowledge.

1:17:49

And the idea was that

1:17:52

Chile's economy was running

1:17:54

under import substitution industrialization.

1:17:57

And there really were not a very

1:17:59

developed epidemics. to speak of, and

1:18:02

no economist in Chile had been trained

1:18:04

in that kind of American approach to

1:18:06

economics. So for many decades, Chilean students

1:18:08

would come to the University of Chicago.

1:18:10

They studied mainly with Arnold Harberger, who

1:18:12

was an expert in kind of international

1:18:15

trade. They would take Friedman's

1:18:17

classes. I think he only advised one

1:18:19

of the many who came. And then

1:18:21

when these students went back to Chile,

1:18:23

they had been really transformed and changed

1:18:26

by the Chicago experience. And they sort

1:18:28

of clustered together in a social network

1:18:30

that became known as the Chicago Boys.

1:18:33

And they were not very popular

1:18:35

or influential because all of

1:18:37

the economic ideas they had went completely against

1:18:39

the grain of how Chileans

1:18:42

approached running the economy. There

1:18:44

were strong connections between business and the state. And

1:18:47

so the Chicago Boys were just kind of

1:18:49

outliers. Now Aindé was

1:18:51

elected. I think it was three

1:18:53

years in. He was overthrown by

1:18:55

the coup led by Pinochet. And

1:18:58

when Aindé was overthrown, inflation in Chile

1:19:01

was 600% annually. So

1:19:03

I think it's just like a very important piece of

1:19:06

context that sometimes is left out of the story. There

1:19:08

was some incompetence in the sort of economic governance

1:19:10

of that country before the coup. Doesn't

1:19:13

justify the coup, but let's go on. No,

1:19:15

anyhow. So it's down to about 300% in

1:19:17

the following year. But things really still aren't

1:19:20

working. It's at that moment that the Chicago

1:19:22

Boys are sort of able to get the

1:19:24

ear of Pinochet and say, look, we have

1:19:26

a plan and we can do things differently

1:19:28

and we think it will really work.

1:19:31

Now, it is true that this

1:19:33

plan, it became known as El

1:19:36

Adrio the Brick, the very big

1:19:38

document, which basically summarizes neoclassical economics

1:19:40

and market consensus. This had

1:19:42

been floating around during the

1:19:45

run up to the coup, but it was

1:19:47

not the justification. It wasn't the founding document

1:19:49

of the coup. The coup came from a

1:19:52

variety of different sources, but was not done

1:19:54

in the service of less-erexed pre-market capitalism. So

1:19:57

at any rate, eventually they are able

1:19:59

to... say it's been a

1:20:01

year, nothing has really changed, we've got

1:20:03

a plan for how to change it.

1:20:05

And it's at this point that Friedman

1:20:07

comes to the country and he basically

1:20:10

comes to sort of advertise and

1:20:13

solidify this policy. And the policy

1:20:15

is how do we get 300%

1:20:17

inflation down

1:20:19

and how do we create an economy

1:20:22

that will generate growth. And so he

1:20:24

comes and I was able to find some

1:20:27

documents that he don't think other historians had

1:20:29

found like a trauma log where he describes

1:20:31

his six days in Chile. He meets with

1:20:33

a central bank, he meets with this other

1:20:35

rich guy, he goes here, he goes there,

1:20:37

he speaks to the regime. He

1:20:39

does meet with Pinochet. He has like

1:20:41

a 45 minute audience with him. He

1:20:44

basically says what he says in most

1:20:46

of his public appearances, which is you've

1:20:48

got to reduce the amount of money

1:20:51

that you're printing, you've got to liberalize

1:20:53

your economy, you've got to move away

1:20:55

from this ISI, you've got to reprivatize

1:20:58

kind of the basic toolkit that

1:21:00

pretty much any American economist except

1:21:02

for one who was a socialist

1:21:04

or communist would have said this

1:21:06

is not super novel set

1:21:08

of interpretations. And basically they all say to him,

1:21:10

isn't this going to hurt too bad? Isn't it

1:21:13

going to be too painful to try to end

1:21:15

inflation? And he says, yes, it's going to be

1:21:17

painful. You have to have some relief programs,

1:21:19

but you have to do it quick. The quicker

1:21:21

you do it, the sooner you'll be over it

1:21:24

and you're not going to get anywhere with this

1:21:26

type of inflation rate. And

1:21:28

it's interesting because in the United States

1:21:30

when he was also advising the presidents

1:21:32

on how to bring down inflation, he

1:21:35

was a gradualist. He'd say slowly, right?

1:21:37

But in the United States we're talking

1:21:39

six, nine percent inflation, maybe max. When

1:21:42

you got 300%, he's like, you have to really

1:21:44

change up the game. And so

1:21:46

he makes all these speeches in his

1:21:48

travel log, it's similar to the civil rights thing

1:21:50

in that he's kind of not registering a lot

1:21:53

of what's happening. He's like, oh, all the soldiers

1:21:55

have guns. They seem like police officers except they

1:21:57

have machine guns. And I think he just kind

1:21:59

of. to write it off as like, this

1:22:01

is South America, they do things differently here. And

1:22:04

then after that, he is, you know,

1:22:06

accused of being a supporter of the

1:22:08

regime. And so this goes on to

1:22:10

sort of dog him the rest of

1:22:12

his life. I think

1:22:14

sometimes, especially American listeners and readers

1:22:17

are approaching this through like a domestic

1:22:20

politics framework, where like, if

1:22:22

you're on the Council of Economic Advisors of

1:22:24

like George Bush, it's because like you agree

1:22:26

with George Bush, and you support

1:22:28

his programs, or like Biden, like you

1:22:30

politically agree with Biden, and you want

1:22:32

to persuade him, of course, of your

1:22:35

particular ideas, but you're aligned. And so

1:22:37

there's a way in which Freeman going

1:22:39

to advise Pinochet has been like interpreted

1:22:41

as if he joined like Pinochet's Council

1:22:43

of Economic Advisors, because he

1:22:45

was aligned with, you know, his

1:22:48

autocratic rule, when, in fact,

1:22:50

it's better understood as a practice

1:22:53

throughout the Cold War of American

1:22:55

economists going to many different countries,

1:22:57

including often socialist countries, and offering

1:22:59

their advice, which is like, do

1:23:01

everything different than what you're doing.

1:23:04

The assumption that visiting Chile

1:23:06

and talking to Pinochet equals Freeman is

1:23:08

a supporter of the regime. That's

1:23:11

just unwarranted. Yeah, I think it really actually

1:23:13

comes through in your book that it was the

1:23:15

aim of the sort

1:23:18

of Chicago boys who were trying

1:23:20

to get some kind of imprimatur

1:23:22

international and even American imprimatur for

1:23:24

the project that they were trying

1:23:26

to implement in the country to

1:23:28

bring Friedman, the name, the great

1:23:30

name Friedman to the country, and

1:23:32

sort of give a kind of

1:23:35

serious intellectual gloss to what they

1:23:37

were trying to accomplish. And,

1:23:39

you know, I'm quite sympathetic to the

1:23:41

idea that you say that sort of

1:23:43

like it becomes a strategy of the

1:23:46

global left to associate

1:23:48

the coup, the thousands

1:23:50

of people who were killed by Pinochet, the tens

1:23:53

of thousands who were tortured, the hundreds of thousands that

1:23:55

were forcibly displaced with

1:23:57

Friedman, because it's easier to...

1:23:59

sort of damn the whole American global

1:24:01

project with the name of Friedman than it

1:24:04

is to just sort of point to Pinochet

1:24:06

as a bad actor. But

1:24:08

from my perspective, it does seem

1:24:10

like a little bit, and again,

1:24:13

maybe symptomatically so naive of Friedman

1:24:15

to think that going to the

1:24:17

country at this time where a

1:24:19

bunch of Chicago educated graduate students

1:24:21

were in the ministries of this

1:24:23

new government established by

1:24:26

a violent military coup was

1:24:28

not going to be perceived

1:24:30

as giving his

1:24:33

stamp of approval to this

1:24:35

project. I am much less sympathetic to

1:24:37

later on him sort of describing how

1:24:40

unfair it is that he's being tarred

1:24:42

by his association with Pinochet because it

1:24:44

just kind of seems like, are you

1:24:46

a fundamentally unsavvy political actor? Not in

1:24:48

many ways, you know? In many, many

1:24:50

times, he's aware of how his name

1:24:52

and the power of his public

1:24:55

image can be used for the benefit

1:24:58

of some kind of more

1:25:00

crassly political project than his own

1:25:02

economic investigations. And so

1:25:04

I don't necessarily feel that I

1:25:06

owe him the benefit of the

1:25:08

doubt in this situation, especially because

1:25:11

afterwards he does offer some defenses

1:25:13

of the regime that seem totally unnecessary, like

1:25:16

especially if he wants it to be just

1:25:18

treated as well. He went to Yugoslavia, you

1:25:20

know, you went to Eastern Bloc countries. That

1:25:23

doesn't mean you've approved the regime. But you

1:25:25

know, then he does give speeches where he

1:25:27

talks about how Allende was threatening to bring

1:25:30

about totalitarian rule of the left, that the

1:25:32

sort of welfare state in Chile represented quote

1:25:34

extortion and coercion at its very center because

1:25:36

in order to do good, the welfare state

1:25:39

must use force to take people's money away

1:25:41

from them. And when I

1:25:43

was reading this part of the book, I

1:25:45

wrote in the margins and I was almost

1:25:47

screaming like, okay, if taxation is coercion, what

1:25:49

about helicopter rides? You

1:25:52

know, what about torture? Isn't that coercion? I

1:25:54

mean, it just seems like a potentially

1:25:58

constitutive, but certainly unacceptable

1:26:00

blind spot in his part

1:26:02

to not see how this

1:26:04

all might tarnish the

1:26:07

kind of economic agenda that he had for America

1:26:09

and for the globe. Yeah. I

1:26:12

mean, I do think it's an

1:26:14

overreach and it didn't serve him

1:26:16

well to say the Allende government

1:26:18

is an example of the welfare

1:26:20

state because it's not. I mean,

1:26:22

there were massive expropriations of

1:26:24

private property. 90%

1:26:27

of the banking sector was taken over by the state,

1:26:29

which is how you get 600% inflation in

1:26:31

three years. And the

1:26:34

expropriations were done very

1:26:37

rapidly and Allende was actually

1:26:39

in an intellectual movement. It

1:26:41

wasn't pure Marxist in which

1:26:43

there are stages of development before

1:26:45

the ground is ready for the

1:26:47

workers revolution. The Allende take on this was

1:26:49

you have to do it fast and you

1:26:52

have to push through. And

1:26:54

so he moved fast. He didn't have a

1:26:56

huge mandate and a lot of people left

1:26:58

the country because of the way the expropriations

1:27:01

were done. So you had nobody to run

1:27:03

the state owned companies and those were the

1:27:05

ones that had to be propped

1:27:07

up by money printing. So none of

1:27:09

this is a welfare state. This

1:27:11

is like its own thing. So just

1:27:14

as I don't think socialist movement should hang its

1:27:16

hat on Allende, it's also completely inaccurate to say

1:27:18

like Allende is the welfare state. Is it not?

1:27:21

It's his own thing. So there's that. And

1:27:23

oversimplification and that's Friedman and his polemic, you

1:27:25

know, I call it the kind of decadent

1:27:27

Friedman. And the question of

1:27:29

whether he should have gone, I think one

1:27:32

question is to say like, OK,

1:27:34

you're the world expert on inflation and

1:27:37

your students ask you to come to a country where there's 300

1:27:39

percent inflation to

1:27:41

help them solve the problem. And

1:27:44

so your choice is, OK, yes,

1:27:46

I'll come or no, I won't

1:27:48

come because if I come, I

1:27:50

could be construed as supporting this

1:27:52

regime. And that would be bad

1:27:54

for my reputation. You know, so

1:27:57

I think it's legitimate for him to decide

1:27:59

like. I will do more good by

1:28:01

coming and by actually helping them

1:28:03

fix this problem and

1:28:06

then making that trade-off. I don't know. I

1:28:09

don't know because you say he's like at this

1:28:11

moment Pinochet is a pariah, right? And

1:28:13

so his arriving does seem to give

1:28:15

some amount of legitimacy to

1:28:18

the state, to this nascent project.

1:28:22

And I understand the motivation. I'm not

1:28:24

compelled by the justification. Here's

1:28:26

another question. This is something I didn't even

1:28:28

really remember about the sequence of events because

1:28:31

the reason this becomes such a huge event

1:28:33

in Friedman's career is that he gets the

1:28:35

Nobel Prize 76. Three

1:28:38

weeks before that, a

1:28:40

major critic of the Pinochet

1:28:42

regime, La Télier, who was

1:28:44

a supporter of Yende, who

1:28:46

was forced out of the

1:28:48

country, is killed by a

1:28:50

bomb in Washington, DC by

1:28:52

Operation Condor, the sort of

1:28:54

global terrorist campaign that Pinochet

1:28:56

government implements to try to

1:28:59

snuff out, renegade exiles and dissidents. So

1:29:01

this guy is killed and it's only

1:29:03

several weeks after he had written this

1:29:05

big piece for the Nation magazine conflating

1:29:08

Friedman with the coup. And

1:29:10

then several weeks later, Friedman gets

1:29:12

the Nobel Prize and as a

1:29:14

result, the Nobel Prize is seen

1:29:16

by leftists and humanitarians of various

1:29:18

kinds around the globe as sort

1:29:21

of being like this moment where

1:29:23

the global north is like giving

1:29:25

its imprimatur, its approval to the

1:29:27

Pinochet project and the coup and the

1:29:29

violence that came in its wake, which

1:29:32

is not fair to Friedman,

1:29:34

right? And I understand

1:29:36

his annoyance with the fact that his great

1:29:38

moment is being tarred by his association with

1:29:40

this project that he was really only associated

1:29:42

with for six days in Santiago.

1:29:46

But does he ever say

1:29:48

something denouncing this assassination? Imagine

1:29:51

how powerful it would have been for him to accept

1:29:54

the Nobel Prize and say, and it's

1:29:56

awful that this regime that I am

1:29:59

associated with has just murdered a

1:30:01

dissident on American soil. Yeah. I

1:30:04

mean, I know I'm like, I'm wish casting

1:30:06

here, but you know, you did the same

1:30:08

thing when we were talking about civil rights.

1:30:10

So this is where I become not sympathetic.

1:30:12

No, he didn't really use his platform in

1:30:14

this way. He sent letters at the behest

1:30:16

of Amnesty International and others, he would send

1:30:18

letters to Pinochet, but I don't know that

1:30:21

he ever contemplated denouncing him. And I don't

1:30:23

know that he would have thought

1:30:25

that would have had any effect. I

1:30:27

think there's definitely still something to be said

1:30:29

and criticism to be leveled. It's just a

1:30:31

lot of it is leveled just without knowledge

1:30:33

of what actually happened. And then

1:30:36

I think it becomes a distraction from

1:30:38

more substantive questions, you

1:30:40

know, about like what actually

1:30:43

happened in Chile and like what do we

1:30:45

expect of our public figures? And

1:30:48

is it okay to

1:30:50

offer advice to a regime if

1:30:52

you think it will benefit its people, but you

1:30:55

don't want to legitimate it. So I think it's tricky. In

1:30:57

your final chapter, you talk about his

1:30:59

legacy and the question of whether he'll

1:31:01

be remembered as an economist, as

1:31:04

a political figurehead or as a philosopher

1:31:06

of freedom. And I think

1:31:08

that's a really interesting way to think about how

1:31:11

we remember him. How do you

1:31:13

think that he is remembered or that he should

1:31:15

be? So I

1:31:17

think he will be remembered mostly

1:31:19

as a representative of 20th century

1:31:21

conservatism and its economic components. And

1:31:24

I think what makes American conservatism

1:31:26

distinctive is that it does incorporate

1:31:28

this libertarian pro-capitalist endorsement of creative

1:31:31

destruction that most other conservative movements

1:31:33

in other nations consider in decimal,

1:31:35

right? Because capitalism is so disruptive.

1:31:38

So I think he'll be remembered as really

1:31:40

encapsulating that. He is still

1:31:43

remembered as an economist. And I talk

1:31:45

about this in some detail in the

1:31:47

book. A lot of his ideas have

1:31:49

been sort of absorbed into the economic

1:31:51

mainstream, not in their exact technical details,

1:31:53

which I think isn't to be expected,

1:31:55

but absorbed into a lot of different

1:31:57

ways that macroeconomics is taught the way

1:31:59

inflation is. lives

1:34:00

are lived, he often missed that

1:34:03

sort of historical particularity. And

1:34:05

I think our discussion on civil rights is

1:34:07

probably the sharpest place. You see that is

1:34:10

missing. He's just not really

1:34:12

understanding the sort of lived historical experience

1:34:14

of being black in America because it's not

1:34:16

part of his framework, which is universalist. So

1:34:19

I think the universalism can

1:34:21

be too flattening to

1:34:23

actual experience. And then I also think

1:34:25

the optimism, I mean, it's

1:34:27

part of his power to be optimistic, but

1:34:29

it also, like not everything is optimistic. Not

1:34:32

everything is going to work out for the

1:34:34

best and being too committed to that,

1:34:36

I think, can just mean shutting your eyes

1:34:39

to what's happening. Yeah. Related

1:34:41

to this, there was a moment in

1:34:43

the book where you described a criticism

1:34:45

that John Kenneth Galbraith made of him.

1:34:48

I think it must have been in the 60s. And

1:34:50

he said something like Friedman is

1:34:52

more of a quote, romantic artist

1:34:55

than an economist. And you sort of

1:34:58

treated it as this sort of disparaging

1:35:00

throwaway line. But I was

1:35:02

struck by that and I wondered, what

1:35:04

did he mean by that, romantic artist?

1:35:06

And could we actually think of Friedman

1:35:08

productively as more of a romantic and

1:35:10

an artist in some dimensions of

1:35:12

his public life? I

1:35:14

think Galbraith is probably talking about capitalism

1:35:17

and freedom, and it does have a

1:35:19

little bit of that 60s vibe of

1:35:21

kind of sticking it to the man

1:35:23

and the liberationist ethos

1:35:25

that will be unleashed when we all

1:35:27

do our own thing. And

1:35:30

I think that is a chord in American culture

1:35:32

that he hit very successfully. Although I have to

1:35:34

again note, he did it with Rose. I'm not

1:35:36

sure he did it on his own. I might

1:35:38

even have just been Rose who hit that chord.

1:35:41

So I think there is this kind of

1:35:43

romance of the unfettered self. It's very American.

1:35:45

And I think Friedman was able to take

1:35:48

that idea and say, it

1:35:50

actually has economic consequences or it

1:35:52

has economic meaning and

1:35:54

it can be explained in this

1:35:56

more abstract way and it can

1:35:58

be translated into politics. and

1:36:00

policy, this kind of dream of

1:36:03

inner freedom and the kind of soul

1:36:05

expressing itself. All of this can also

1:36:08

be a politics and a political economy.

1:36:10

So that probably is what will endure

1:36:12

of his work because we're

1:36:14

not necessarily reading Keynes to

1:36:17

figure out what the government should do. We're

1:36:19

reading it as a moment of kind of

1:36:21

human consciousness and awareness and a massive shift

1:36:23

in our thinking. And I believe that Freeman

1:36:25

stands in the same way. In some ways

1:36:27

the counterpoint to Keynes and someone else will

1:36:29

come along and be the counterpoint to him.

1:36:32

Yeah, I think that's a pretty good place to end

1:36:34

it. What do you think, Matt? Yeah, shall we wrap

1:36:36

it up? Yeah. Thank you, Jennifer. Thank you so much.

1:36:38

Thanks, Sam. Thanks, Matt. This was a real

1:36:40

pleasure. Thank you, Jennifer. Thank you, listeners.

1:36:42

Catch you next time. Thank you. Bye-bye. Bye-bye.

1:37:27

Thank you.