Kind: captions
Language: en
the following is a conversation with
Jennifer Burns a historian of ideas
including the evolution of economic
political and social ideas in the United
States in the 20th century to today she
wrote two biographies one on Milton
fredman and the other on iron Rand both
of which I highly
recommend this was a super technical and
super fascinating conversation at the
end and I make a few comments about my
previous conversation with president
zalinski for those of you who may be
interested this is Alex region podcast
to support it please check out our
sponsors in the description and now dear
friends here's Jennifer
Burns you have written two biographies
one on Milton fredman and one on Ein
Rand so if we can we will focus on each
one separately but first let's talk
about the ideas that two of them held in
common the value of individual Freedom
skepticism of collectivism and the
ethics of capitalism can you talk about
the big picture ideas they Converge on
yeah so Milton Freedman and Ein Rand in
the biggest picture they're both
individualists and they're skeptical of
collectivities and collectivism so their
unit of analysis is the individual
what's good for the individual what
works for the individual and their
understanding of society kind of flows
from that
they also both use this focus on
individualism to justify and to support
capitalism as a social and economic
system so we can put them in a similar
category we can call them individualists
we could call them Libertarians of A
Sort they're also really different in
how they approach capitalism how they
approach thinking you know irand
developed her own moral and
philosophical system to justify
individualism and to connect the
individual to capitalism and to support
capitalism as a social and economic
system fredman struggles a bit more with
how to justify capitalism and he'll
ultimately come down to Freedom as his
core value like his God as he says and
so Freedom does connect back to the
individual but he's not justifying
capitalism for his own sake he's
justifying it for its ability to
underwrite freedom in the social sense
and also in the individual sense at a
high level are there interesting
differences between them you already
mentioned a few maybe in terms of who
they are personally maybe in terms of
how they approach the justification for
capitalism maybe other ways yeah for
sure so beyond this idea that that
Milton fredman takes a while to come to
his justification of capitalism morzin
ran kind of has it from the start she
really focuses on the core quality of
rationalism and rationality rationality
is the defining feature of human beings
and so she works from from there whereas
fredman Milton fredman eventually
converges on this idea of freedom so
that's one part of it the other is their
intellectual styles are really really
different their interpersonal styles are
really different so fredman has big
Ideas big principles that guide him but
he's also deeply empirical he spends
most of his career doing historical
research economic research pulling data
from how people actually make economic
decisions and live in the world and
using them to test and refine his
theories where Rand to some degree we
could say she's empirical and that she
lives through the Russian Revolution and
takes a very big lesson from that but
her style of thinking is really um first
principles an axiomatic approach going
from the basic uh idea of rationality
and then playing that out in different
spheres and so those are just very
different intellectual approaches and
then they lead in some ways to really
different ways of thinking about how you
get things done in the world irand is a
purist she wants to start with the pure
belief she doesn't want it to be diluted
you know one of her favorite sayings was
you know it's earlier than you think in
other words we're still moving towards a
place where we can really hold and
express these ideals purely fredman
although he didn't use this terminology
was much more a halfa loaf guy you know
like I'll take what I can get and then
I'll try to move to where I really want
to be but he is able to compromise espe
especially when he moves from being an
economist into being more of a political
thinker and so that's a really different
intellectual style and then it also
plays out in their lives in that Ein
Rand is incredibly schismatic I mean she
wants her friends to believe what she
believes and support what she supports
and she's willing to break a
relationship if it doesn't match Milton
fredman he also does tend to have
friends who agree with him
yet he's always willing to debate his
opponents and he's willing to do so with
a smile on his face you know he's a kind
of he's the happy warrior and he
actually will win a lot of debates
simply by his emotional affect and his
cheerfulness and his confidence where
Rand will lose debates because she gets
so angry in the face of disagreement so
yeah they have they have a lot of
similarities and a lot of differences
and and it's been really fascinating to
kind of dive deep into both of them I
just uh relistened to an Ran's I think
last lecture or at least it's called
that and just the the confrontational
nature of how she answers questions or
how she addresses critics and so on
there is a kind of Charisma to that so I
think both of them are very effective at
winning over sort of uh popular support
but in very different styles it seems
like H Rand is is very cranky but
there's I mean it's the most charismatic
cranky person I think I've ever listened
to
yeah I mean people talked about her
meeting her and coming to believe in her
ideas in a similar way as I did with
Marxism in that suddenly everything made
sense and that when they came to believe
in objectivism they felt they had this
engine for understanding the entire
world now after a while for most people
that then became confining but yeah that
certainty and and fredman had some of
that as well he he clothed it
differently he clothed it in happiness
where ran kind of closed it as you said
in crankiness or anger I mean there's
also an arc to ran she gets kind of
angrier and angrier and crankier and
crankier over the course of her life
yeah what I enjoyed about my research is
I was able to get into this early moment
when she was different and a little more
open and then I kind of watched her her
clothes and her Harden over time would
it be fair to say that uh Milton fredman
had a bit more intellectual humility
where he would be able to sort of evolve
over time and and be convinced by the
reality of the World to Change sort of
the nuances of policies the nuances of
how he thought about economics or about
the world yeah absolutely fredman
believed in being able to say I was
wrong and there are some things he said
he was wrong about we we'll delve more
into monetarism and monetary policy but
he was able to talk about the ways his
ideas hadn't mapped on to the world the
way he thought they would he does a
really interesting interview at the end
of his life where he's beginning to
voice some doubts about globalization
you know which was he was sort of a
profit of globalization a cheerleader of
globalization he really thought it would
lead to a better world in all respects
and towards the end of his life it's
about two years before he dies there's a
note of doubt about how globalization
unfolded and what it would mean
particularly for the American worker and
so you can see him still thinking and
that to me I had sort of assumed he
became crankier and crankier and more
and more set in his way and and of
course there's a phase where where he
does become that way especially as he's
in the public eye and there's not room
for nuance but to find in the last years
of him life of his life him being so
reflective that was absolutely not
something Rand could do I think there's
a thread throughout this conversation
where we should actually also say that
you're kind of a historian of ideas I am
a historian of ideas yes and so we're
talking about today in part about two
people who kind of fought
for ideas for an idea like we mentioned
freedom for for capitalism and they did
it in very different ways and it's so
interesting to see sort of the impact
they both had and how the their uh
elucidation explanation of those ideas
like reverberated throughout society and
how we together as a society figure out
what works you know uh the degree to
which they have influence on the the
public the degree to which they have
influence on individual administrations
like the Reagan Administration Nixon and
so on and how it might return like fade
away and then come back in modern times
and it's so interesting if you just see
this whole world as a as a game of ideas
where we were like pushing and pulling
and trying to figure stuff out uh a
bunch of people got real excited over
100 Years Ago by communism and then they
try stuff out and then the the
implementation broke down and we keep
we keep playing with ideas so these are
the two greats of playing with ideas I
think that that's a thread that just
runs through this yeah and and of kind
of pushing back against that movement
towards communism social democracy but
but one one difference I didn't that I
really should emphasize Rand is a writer
of fiction she's a philosopher but she's
also a writer of fiction so she is
working almost in the Mythic register
much more in the psychological register
she's creating character that people
identify with and people relate to
experiences they've had and that's one
of the reasons she hits so deep and
she's also offering people you know I
read all the fan letters to her people
would say things like I read the
Fountain Head and now I'm getting a
divorce you
know you know having just um these
incredible realizations Milton Freedman
didn't get such didn't get S things or
um you know I'll meet someone and and
they'll say to me you know Ein Rand is
is the reason I went to medical school
you know like like a woman a couple of
woman said this to me a few years back
it never even occurred to me that I
could be a doctor until I read IR Rand
and I said I'm going to go to medical
school and so she has that really
intense impact on people so she thought
of herself as rational she thought of
rationality as kind of what she was
doing but she was actually doing a kind
of mytho mythopoetic psychological work
as well whereas fredman on the one hand
was much more rational there's a whole
set of economic thinking and he provides
a rational framework for understanding
the world and it's the framework of you
know neoc classical economics at the
same time he does pull on mythologies
you know of the idea of America and the
Gilded Age the frontier mythology the
individual immigrant the settler
mythology he pulls on these but he
doesn't create them and they and they
are he's more kind of playing a tune he
already has uh whereas I think ran
really does something a little bit
deeper and her ability to reach into
people's psyche and then take that
emotional
psychological experience and fuse it to
an intellectual world and a political
world and that's really what makes her
so powerful and so I think she comes
back in to relevancy in a different way
than fredman does because I think in
some way she's tapped into a kind of
more Universal human longing for
Independence and autonomy and kind of
self-creation and
self-discovery nevertheless there are
still pragmatic ideas that uh are still
important today for Milton fredman even
just on the economics level so let's dig
in um let me try I took some notes let
me try to summarize who Milton fredman
is and then you can correct me yeah okay
so he is uh widely considered to be one
of the greatest and most influential
economists in history not just the 20th
century think ever he was a an advocate
of economic freedom like we said and
just individual freedom in general he
strongly advocated for free market
capitalism and limited government
intervention in the
economy though you do give I've listened
to basically everything you have on the
internet you give some more depth and
Nuance on his views on this and in your
books he uh led the famed Chicago School
of economics and he won the Nobel prize
in economics in
1976 he greatly influenced economic
policies during the Reagan
Administration and other administrations
he was an influential public
intellectual highly influential not just
among economists he lived 1912 to 2006
so that means he lived and worked
through some major world events where
his ideas were really important the
Great Depression with the New Deal World
War II with the postwar reconstruction
the rise and fall of the Breton Woods
monetary system as we may talk about the
Cold War and all the conflicts involved
in that sort of the the tensions around
communism and so on so the fall of the
Soviet Union and also he has some
interesting relationships to uh China's
economic transformation yeah since the
1970s the stack flation of the 1970s and
I'm sure there's a lot more
so uh can can you uh maybe continue this
thread and give a big picture overview
of the ideas he is known for yeah sure
and that's a great summary uh you learn
you learn fast so let me start with the
economics and and then I can kind of
transition to how he used those economic
ideas to become a real voice in the
American conservative movement in the
American political realm so I'll kind of
highlight
four ideas or contributions or episodes
um one was his work with Anna Schwarz in
revising our understanding of the Great
Depression and that's tightly related to
the second which is the school of
monitorisation of stagflation and the
explanation of that in the 1970s which
really is one of these these sort of
career making predictions and we can dig
into that and then in terms of technical
economics he's known for for the
permanent income hypothesis which he
develops with a group of female
collaborators that I can talk about so
those are kind of four technical pieces
and up being really brought together in
what becomes The Chicago School of
Economics he's he's undoubtedly the head
in the leader of The Chicago School of
Economics there's an earlier generation
that he learns from there's his
Generation Um there's also a Chicago
School of Law and economics that's
really profoundly influential and then
there'll be kind of a third generation
that he's somewhat distinct from but
that goes on to really shape economics
but let me go back to these kind of four
pieces and let me start with Great
Depression so Milton Friedman actually
lives through the Great Depression he's
in college when it hits and he is so
he's in college it's 1928 to
1932 and he's aware of the depression
and he's deciding should I study mathem
itics or should I study economics and he
hasn't he's had some good economics
teachers but it's really the context
it's looking around at the slow you know
dissolving of economic Prosperity so he
decides to go to Chicago he decides to
study economics and what's really
interesting is that the Great Depression
is so unexpected it's
unpredicted um it's unprecedented and
economists are really struggling to know
how to respond to it and so he's going
to arrive at the University of Chicago
when the field it's is struggling to
know what to do so he's in this kind of
really open space where the the
institutional economics of the
1920s has failed to predict which was
focused on business Cycles this is the
irony their big thing was charting and
understanding business cycles and then
we have the biggest business cycle of
all time and they haven't seen it coming
and they don't have a good explanation
for it and um what he will get at
Chicago
is the remnants of the monetary
understanding of the economy and so his
teachers they don't know exactly what's
going on but they look first to the
banking crisis they look first to the
the 1933 it's you know Bank runs
failures of maybe it's up to a third of
American Banks it's hu thousands of
banks are failing per week so they are
focused on that so that's the first kind
of imprint he will have the Great
Depression has something to do with a
banking system the second imprint he
will have is that all of his professors
are profoundly concerned about the
social crisis they want relief programs
they want them now they want Bank
regulation and financial reform they're
very active this is not Les a fair by
any stretch of the imagination so
Freeman has that imprinting and then
about so that's he gets there in
32 36 37 the ideas of John manard Kes
from Britain which has a different
explanation canes has a different
explanation of the Great Depression will
kind of make landfall in American
economics and be very profoundly
influential on most American e
economists but fredman already it's too
late for fredman he already has a
different perspective so keynesianism
unfolds I can say more about that but it
basically leads to more active federal
government participation in the economy
and what underlies a lot of that it's at
adaptation in America particularly is
the idea that
capitalism has failed capitalism has
revealed itself to have a profound flaw
in that it's two it's its cycles of boom
and bust create social instability chaos
it needs to be tamed it needs to be
regulated and so that becomes the the
kind of Baseline of politics in the
United States the understanding of the
New Deal the understanding of the
Democratic Party even to some extent the
understanding of the Republican party
and fredman never
quite never quite sure about that he has
a hunch that there's something else
going on and he does not buy that
capitalism has sort of ground to a halt
or the other idea is that capitalism has
gone through some sort of phase
transition and it worked great maybe
while we had a frontier this is a very
serious argument that people were making
United States used to have a frontier a
place where you know Europeans hadn't
fully settled of course they're pushing
out the native tribes that's another
story but that this Frontier is the
engine of economic growth and the
frontier is now over it's closed and
we're going to stagnate there's a theory
of secular stagnation and so to deal
with secular stagnation we're just going
to have to have a more active state so
fredman is suspicious of all these
assumptions and he has this idea that is
something to do with money money is
somehow important and so he it joins
together with Anna Schwarz who is uh an
econom she doesn't at this time hold a
PhD she's working for the National
Bureau of economic research and they
come together to do the study of money
in the US economy and it takes them 12
years to write the book and and they're
releasing their ideas and they're
arguing and fredman is writing papers
giving talks saying money is really
important um and nobody's really
believing him he's a crank he's at
Chicago he's out you know Chicago is a
well-known University but he's sort of
considered a crank and then in ' 63 he
and Hest Schwarz published this book and
it's you know 800 Pages it's a
reinterpretation of the history of the
United States through money like the
central character is money whether it's
spec Greenback or the US currency and
they have a whole chapter on the Great
Depression and they what they've
literally done Schwarz has done most of
this they've gone Schwarz has gone to
Banks and said show me your books and
then she's added up column by column how
much money is in your Vault how much
money is on deposit how much money is
circulating and so they literally have
graphs you can see them in the book of
how much money has been circulating in
the US at various different points in
time and when they get to the Great
Depression they find the quantity of
money available in the economy goes down
by a third and in some ways this is
completely obvious because so many
banks um have failed and we don't have
any type of B Bank Insurance um at that
point so if your bank goes under your
savings are there the money essentially
vanishes and it's fractional Reserve
banking right so you've put in they can
loan up to 90% off on their deposits and
so fredman and Schwarz present this
argument that what really made the great
depression so bad was this drop in the
amount of money the 30% drop in the
money they called the Great contraction
and then they go further and they say
well how did this happen and why and
they pinpoint the Federal Reserve which
is a fairly new institution at that time
and they say what did the Federal
Reserve do the lender of Last Resort
what did it do in the face of what
they're depicting is a massive
unprecedented liquidity crisis and they
find it's not really doing much and they
really dig into the details and they
find that the the the Federal Reserve
has gone through a sort of personnel
change and some of the key leaders in
the 1920s Benjamin strong is one of them
he's now deceased and the dominance of
the New York Federal Reserve which in
their telling you know is Global it's
interconnected it's seen a lot of
financial things come and go and they
believe that the New York fed had the
understanding to recognize this is a
liquidity crisis we should be very
generous we should support all the banks
their influence has diminished for the
kind of uh banks that are more um they
don't say like the Rubes and the Hicks
but it basically is it's like the people
in charge don't know what they're doing
and so the FED pursues this kind of
policy of masterly inactivity they don't
see it as their problem they don't do
much there's an enormous liquidity
crisis and that's their version of what
the Great Depression is all about that
it's a financial system meltdown it's a
liquidity crisis and that it in some
ways well in many ways they they argue
very strong counterfactual argument the
Federal Reserve could have prevented it
and it did not and so it becomes then an
Institutional failure and a political
failure not a failure of capitalism as a
system and so this book comes out it's a
blockbuster and even those economists
you've been like Freedman is a crank I
don't buy it are like Freedman and
Schwarz are on to something Milton
Freedman on a Schwarz are on to
something and so that really changes the
game and this is also one of his most
influential contributions because
Freedman and Schwarz becomes the
playbook for the Federal Reserve and we
have lived through this this right the
financial crisis the Federal Reserve is
ready to loan Co the Federal Reserve
does all kinds of new things because no
Federal Reserve chair wants to be in
Freeman Schwarz 2.0 that somebody writes
or they're the bad guy who let the
economy melt down so you know the
specifics of what they say to do have
obviously evolved as the system has
changed but this is this is a playbook
for how to deal with economic crisis
it's Freeman and Schwarz and so it's
absolutely fundamental and that is
really going to be the place he makes
his Mark there's a lot of things to say
here uh so first the book we're talking
about is the a monetary History of the
United States in part for which milon
Freeman won the Nobel Prize uh you've
also mentioned the influence of the
Great Depression if you could even just
rewind to that yes so he went to I guess
College in ruter that's right and he was
uh you know mathematical proclivities so
he was kind of wanted to be a
mathematician
and so it's it's kind of a cool
Crossroads um it's interesting how the
right time the right person arrives
right so you described this really well
that so he had the choice to be a
mathematician or an economist and
Economist is University of Chicago
mathematician is Brown University
whichever and
then uh this is also the beginnings as
you've described of mathematical
economics so he fits in nicely into this
using what I think you said the number
of equations started going up per paper
which is a really nice way to put it so
really the right person at the right
time uh to try to solve this puzzle of
the economy melting down it's so
interesting just one human it it's just
from uh just zooming in on know a single
human making a decision about life and
it's it's hard to know when you're in it
that the world is melting down from an
economics perspective and that I could
do something about this to figure out
what it is and also I'm going to reject
the mainstream narrative about why this
happened yeah so uh the other piece of
the puzzle when he goes to recers he
thinks he'll be an actuary so Milton
freedman's family his parents are
immigrants Jewish immigrants from
Eastern Europe they're pretty atypical
and that they don't stay in New York you
know and and they move to raway New
Jersey and they put together a fairly
middle class life as kind of they have a
shop they do some wholesale buying and
selling and then his father dies when
he's 16 his life becomes more precarious
um but it's never as precarious as he
makes it out to be he's got three older
sisters they earn a good living
incidentally they all have better grades
in high school than he does but he's the
one that goes to college and um but it's
actually really important that he loses
his father figure because he's then
looking for other father figures and he
meets two at Ruckers one is Arthur Burns
who will go on to have a huge influence
in his career no relation to me by the
way but um Arthur Burns is like him a
fellow Jewish immigrant boy on the M
he's older um and he's making a career
as an economist and then there's Homer
Jones who has gone to the University of
Chicago and is studying with Frank
Knight at Chicago and says you have to
go to Chicago so he has these two
mentors and and burns in particular
suggests oh I could be an economist that
could be my career path you know the
idea to be an actuary for an insurance
company I'm not sure where he got that
idea but he just thought that was
something he could do as someone who was
good at math and so the college really
opens the the perspective opens the door
um and then I think it's really key that
again he's he doesn't get um he doesn't
get an explanation that he buys for the
Great Depression so then he's looking
for one and the math part is really
interesting aspect of his career now
he actually comes to Chicago to study
with the mathematical
Economist Henry Schultz but he gets
there and he thinks Schultz is kind of
dumb he really does he's incredibly
arrogant and he he just thinks this
guy's not that smart and it seems that I
mean Schultz did some really important
work in the early stages of mathematical
economics but a lot of the oral
histories about him are like yeah he
wasn't that bright you know so fredman's
maybe
so he falls into the set of students who
were really enthralled with his other
Professor Frank Knight and Frank Knight
is against math and economics um Frank
Knight is like you know a neoclassical
Economist but not a mathematical
Economist he's an old school liberal
he's really concerned about liberal
democracy um economic liberalism and and
fredman is very deeply influenced by
Knight and he continues to pursue
mathematical economics so he'll go for
part of his graduate career he goes to
Columbia University where he actually
gets his PhD from and he works with a
mathematical Economist there and so he
comes out trained in what will
eventually be
econometrics statistics and economics
his early Publications or in statistics
but it's not really where his
intellectual heart and soul are and
eventually he will turn very profoundly
against mathematics in economics and
become a sort of heterodox Str
throughout 20th century economics that
says simple models are better um we need
to work on empirical work off empirical
data not construct elegant models and um
and becomes really sort of
countercultural within economics in that
way and the test of a good model is it
should actually predict stuff that
happen it should predict stuff that
happen it should tie back to what's
going on I'm wondering which direction
to go so first actually if we could zoom
out on the different schools of E
economics yeah just the basics you
mentioned neoc classical we mentioned
kenian economics we mentioned uh what
else did we mention well The Chicago
School of Economics right where does uh
Austrian economics fit into that pile
and marxan economics and can we just
even just linger and try to redefine
kenian economics and Chicago School of
economics and neoclassical economics and
um Austrian economics because they
there's some overlap and tension okay so
schools of Economics so we could start
with classical economics classical
economics we could think of Adam Smith
is kind of your classic classical
Economist the founder of the discipline
classical economics does not really use
math is very close to political economy
it's concerned um with as Smith puts it
The Wealth of Nations it's concerned to
some degree with distribution it's
concerned to some degree with what makes
a good political system
and what tends to really
Define classical economics when you're
looking from a great distance is What's
called the labor theory of value so
where does value come from in classical
economics it comes from the labor that a
person puts into it so maybe this in
some ways a comes from Lock's notion of
property that you kind of mingle you
know your labor with the natural world
we can say labor theory of value so
classical economics concerned with um
Smith is arguing against mercantilism
for more free trade um often goes by the
name of political economy to show it's
more capacious it's thinking of politics
and economics um you can still read
these books today the sentences are long
the words are different but you can
still follow along so the real big
transition from classical economics and
political economy to economics as it's
understood today comes with the marginal
Revolution and the marginal Revolution
is a scientific revolution that happens
in a couple different places
simultaneously right this is one of
these things that you see in the history
of science like you know there'll be
some breakthrough like Darwin has a
breakthrough but like somebody else has
sort of the same breakthrough at the
same time you totally you know
differently so there's a version of
marginalism that's um Continental there
you know there's a version in the German
speaking lands in F in the French
speaking lands and in Britain and they
all kind of come together and the
shift is in the theory of value so the
theory of value in marginalism is on the
margin so say you have one apple and you
want a second one how much is getting
going from one apple to two Apple worth
for you probably quite a bit if you had
10 apples maybe going to 11 apples
doesn't matter that much the marginal
value is less so what marginalism do
does though most importantly is it opens
the door to math and economics because
it means you can graph this now you can
depict this
relationship
graphically and there's some really
interesting work in the history of
Economics that shows a lot of the people
who developed
marginalism were looking to physics as a
model physics the queen of the sciences
and so they were
thinking they they imported terms from
the natural world describe the social
world through the lens of Economics
terms like
equilibrium um so the idea being that if
you looked at a market uh a market would
reach
equilibrium um you know when everybody
is bought and sold all that they want or
the price will settle at an equilibrium
price when it's really the demand and
Supply are matching up and some of these
ideas are things we would pick up at a
microeconomics class oh yes ex this is
still out there this sort of the basic
Foundation of microeconomics marginal
analysis and so in the German speaking
intellectual tradition this is the root
of Austrian
economics and people picking up the
marginal revolution in the German
speaking lands are opposed to the
historicists um who are thinking in a
more evolutionary way about how
societies kind of grow and change and
they have a vision of economic ideas as
applying differently to different types
of social Arrangements where the
marginalists remember are inspired by
physics and this is a set of natural
laws that applies anywhere to any sort
of human society so that's this first
really big fisser that we'll see again
and again are you historically minded do
certain traits of economic life um
inhere adhere and become expressed in
certain types of Societies or are there
Universal economic laws that flow
through any type of society so that's
kind of a juncture a break and so
marginalism first people start using
really geometry to kind of graph things
but marginalism is also opening up to
the possibility of calculus and the
possibility of creating models but at
that point in time late 19th century a
model is something like a physicist does
like think of like an incline plane and
how fast does the ball roll from one to
the other it's a physical representation
of the world and eventually economists
will start to create mathematical
representations of the world but we're
not quite there yet so we're late 19th
century we have this we have this Fisher
we have this introduction of marginal
analysis that marks the the juncture
from classical economics to economics so
let's say now we we have economics but
we still have this fisser between
historical thinking and let's call it
you know natur natural law thinking
that's not quite right but physical laws
versus
contingency um and then in the United
States this ends up mapping onto debates
about capitalism and so more
historically minded
economists um tend to be interested in
the Progressive Movement and which is
invested in taming and regulating
industrial capitalism and changing its
excesses you know um Factory safety laws
wage laws working conditions laws um yet
in general American economists all use
marginal analysis just in different ways
the ones who are more drawn to marginal
analysis become known as neoclassical
economists they're neoc classical the
Neo is because they're using marginal
analysis the classical is because they
don't think we need to change the way
the economy operates or the government
operates they're not Progressive whereas
the progressives are saying things
like the we need to use um social
control uh the the state and the people
collectively and democratically need to
control uh the way economics unfolds and
and make sure things are fair and equal
so that school of thought becomes known
as institutional economics in the United
States by the 20th century so it's part
of the Progressive Movement late 19th
century into the 20th century it really
becomes institutional economics and it's
quite dominant and the neoclassical
economists are still there but they're
very much a minority and Frank Milton
freedman's teacher is one of the
minority neoclassical economists and the
institutionalists are much more
Progressive um still is it fair to say
that the neoclassical folks and even the
classical folks versus the institutional
economics folks it's they have a
disagreement about how much government
intervention that should be in the
economy so neoclassical is less
intervention and then institutional
Economist the progressive folks as more
intervention yes yes exactly right so
this is the situation in the
1920s but um the other piece I should
mention is the first generation of
progressive economists were very radical
they were took closely allied with the
Socialist movement with labor radicalism
and many of them lost their jobs at
universities this is kind of connects to
the early the dawn of academic freedom
this is before academic freedom and they
became they were chasing they became
much more mainstream by the time we get
to the 1920s we don't really have
radical critiques of society coming from
economus much smaller profession much
less important than it is today and
barely peaceful because the 1920s are a
fairly peaceful decade in the United
States so this is a situation when the
Great Depression hits and as I mentioned
before the head the kind of most
important institutional Economist is
Wesley Mitchell and he has said he's
he's written a whole book on business
Cycles but he doesn't see this business
cycle coming and it hits and he doesn't
have a good explanation for it now
perhaps the preeminent neoclassical
Economist was Irving
Fischer now Irving fiser is big into the
stock market and Irving fiser says
sometime in late summer
1929 stocks are going ever higher and
will continue to go ever higher forever
and so
he loses his reputation after the stock
market crashed so so mil and Freedman is
stepping into a field in which the
greats have been discredited and there's
an enormous economic crisis all around
and everybody's struggling to figure out
why the crisis happened yes and the
other thing he stepping into is a world
where in the United States there's a
great deal of anger at capitalism at the
system unemployed people on the street
in Europe there's Rising fascist
movements in Asia there's Rising fascist
movements and so everyone's very
concerned about this and fredman is
seeing a lot of this through the lens of
Frank Knight who feels like we are maybe
reaching the end of what he calls
liberalism he calls himself an
oldfashioned liberalism we're reaching
the end of Representative democratic
government because representative
democratic government cannot solve these
social problems and it h and capitalism
as it has developed Knight is very Pro
capitalist but he says it's generating
inequality and this is putting too many
strains on the system so Knight will
become one of the people who helps
fredman think how do I develop a new
theory of
capitalism that works in an era of mass
democracy where people can vote and
people can express at The Ballot Box
their unhappiness with what's happening
economically so this this larger
movement will generate of which fa hyek
is a part fredman is a part becomes the
very early stirrings of trying to think
about a new sort of liberalism which
will eventually be called neoliberalism
okay so if we can just Linger on the
definitions of things so we mentioned
what neoclassical is and the
institutional economics is what's Kenzie
in economics and The Chicago School of
Economics I guess is a branch of
neoclassical that's a little bit more
empirical versus maybe model based and
kenian is very model model heavy more
intervention of government yes and
there's a that's so the real battle is
Kian versus everybody else that is what
eventually comes to pass in the United
States and in the kind of overall
developed the kind of developed
profession of Economics the other piece
of the puzzle here is the introduction
of mathematics and it's been around the
edges um but it will pick up speed in
the 1930s like the econometrics uh
Society has founded they start
publishing
um people start using more statistical
and mathematical tools to think about
economics and they're given a boost sort
of inadvertently by the rise of
Keynesian economics so so kees is
trained in the neoclassical tradition um
he's a absolutely fascinating figure
he's been there in the peace
negotiations at Versa he basically calls
World War II he's like hey we're gonna
have another War here caused by Germany
because this peace treaty has been you
know done in such a vindictive way and
people have made such bad decisions he's
there he sees it happening and so when
um the Great Depression unfolds he
basically comes up with a new theory for
explaining what's going on and the
previous neoclassical understanding is
sort of things go up and things go down
and when they go down there's a natural
mechanism to bring them back up so when
the econom is going down prices are
going down wages are going down
everybody's losing money but event firms
are going to realize hey I can hire
people cheap hey I can buy stuff cheap I
don't have a lot of competition maybe I
should get in the game here and then
others will start to get in and then you
regenerate prosperity in that way and so
Kan
says sure that's one Theory but
something different is happening right
now part of why it's happening is
because we have work the working class
is more empowered now they're not simply
going to just take low wages and ride
them down to the floor we might not hit
the floor but also he says people might
become too anxious to spend they might
not want to invest and you know canes
has these discussions of animal spirits
right he's still enough of a political
Economist to think not just in terms of
human rationality but what are some
other things going on in human beings
and people might decide to sit on their
money they might not invest it and so
what happens then is you could get stuck
in a bad equilibrium so in the
neoclassical model the equilibrium kind
of restarts and resets itself and he
says no we could get stuck here we get
stuck in the depression and in that case
what has to happen he says the
government stimulates investment and the
government itself invests and then he
argues that you know uh this is a
student of his Richard Khan says you
know as a government invests a dollar it
has like a multiplier effect a dollar
spent by the government kind of ramifies
out throughout the economy so it takes
the government and puts it in the center
as opposed to say the banking system or
the financial system which would be the
more fredman analysis and for many
economists of fredman's generation and
he's a weird generation because it's
it's the the generation that becomes
dominant it's just like four years older
the men who become keyy in economics but
that four years is really important
because they come in to gradate school
in economics and they get exposed to the
new ideas of John May AR kanes and they
you know I think it's PA Samson calls it
like it was like a south sea virus that
that attacked all of the young all of
the younger economists immedately
succumbed and like no one under 50 ever
got the disease right because their
their thinking is already set and so um
keynesianism KES himself is very
suspicious of math and economics and and
he and fredman is fascinating one of the
first books by Yan tingman a Dutch
Economist to use math and economics
these huge volumes volume one um KES
pans it volume two fredman pans it so
they're they're in the same page but
what happens is as keynesianism arrives
in the United States Franklin Roosevelt
is not really a Keynesian he's kind of
an an accidental or experimental
Keynesian Keynesian and there's a bunch
of different ideas in the United States
that that are very similar to
keynesianism they're not theorized but
there similar ideas that the government
has to do something so this all comes
together and and American economists
realize that you can construct models in
the Keynesian perspective and if you can
use numbers in these models you can go
to Washington DC with
numbers and you seem like you have a you
have a lot more Authority and so math
becomes really twinned into Keynesian
economics so numbers are used as a kind
of uh um a symbol of expertise we we
really know what the hell is going on
because we have some numbers right right
and we can create a model and so we can
say okay in the model the interest rate
is here and taxes are here so let's play
with government spending let's make it
up let's make it down and then we can
get an estimation it'll spit out here's
predicted GDP so the other piece of the
Keynesian Revolution is it really gets
people thinking kind of holistically
about the economy as a one conceptual
unit and you then
have what Paul Samuelson will end up
calling the neoclassical synthesis and
this still in economics today if you
take micro you're going to get supply
and demand scarcity marginal analysis if
you take macro you're going to get a
very different approach and that's more
Keynesian based and so the idea is that
and this makes sense I mean you can
think of this from statistics right the
way things act individually versus when
they're all added together can be very
different so so there's this kind of
uneasy piece where economists are using
kind of neoclassical tools to analyze
individual behavior and individual
Market behavior and they're shifting to
a different Paradigm when they think
about the economy as a whole and in this
Paradigm of the economy as a whole the
federal budget the taxing and spending
power of the federal government become
Paramount and that is called the fiscal
Revolution and that's really the essence
of keynesianism but the key thing to
remember is that keynesianism and Canes
are different and there's this famous
episode where John manard kees comes to
DC and he goes to dinner and he comes
back and he says to one of his friends
in London he oh yeah it was really
interesting I was the only non-c in
there yeah you know uh so keynesianism
is more government intervention fiscal
policy so put the government at the
center of influencing the economy and
then the different flavors of whether
it's Austrian economics or Chicago
School of Economics is saying no we have
to put less government intervention and
Trust the market more and and the
formulation of that from Milton Friedman
is trust the money more the the not
trust but the money supply is the thing
that should be focused on yes so so the
austrians and the Chicago schools see
economic prosperity and growth comes
from Individual initiative individual
entrepreneurship kind of private sources
the private Market is what drives
economic growth not the public sector
and so for fredman then the question is
what is a government's role and because
he's lived through the Great Depression
he's not Les a fair and he won't ever be
Les a fair now interestingly hyek living
through the Great Depression at first is
Les a fair and he's like sure like let
it rip and things get so bad that
Hayek's like okay that's not going to
work can we actually define l a fair so
what what do we mean like what's the
free market what's Le Fair what's what's
the extreme version here so yeah Le fair
means leave a be in France it's more
often used as an insult than as an
actual um very few people are completely
and totally Le a fair that would be like
the pure Le Fair would be the sort of
pure maybe pure Anarchist position like
the state does nothing or the state
isn't even there um but it tends to if I
could maybe make it more precise it
would be focused on freedom of contract
would be essential and that means um
like the the buyer of Labor and the
seller of Labor must have absolute
freedom to contract so that means no
minimum wage law no working hours law um
no employment law things like that that
that was and this is all pre-
Progressive movement a lot of things are
that way right you you know imagine
you're in 19th century America and you
have a farm and you hire someone to help
you on the farm you offer the money they
take it if they fall off a ladder and
break their back maybe you help them out
maybe you don't right but there's not a
whole apparatus of legal liability and
safety and things like that um so that
would be one piece another piece of Le
Fair would be free trade amongst Nations
um so no regulation of who can invest in
a nation or who can take money out of a
Nation so nepon steel could come and
invest in US steel and there would be no
grounds in which to reject that um or
you could as a billionaire in the United
States relocate you and all your money
to another country and the United States
couldn't try to keep you and and nobody
else could stop you from coming in um
and so and then in the context of
economic crisis Le Fair would would
not Encompass centrally provided relief
because in the pure Theory again very
seldom applied purely but in the pure
Theory the wages need to come down far
enough and people need to be desperate
enough to start taking work and to start
the machine again so the theory would be
if you give people relief they might not
go back to work now almost nobody says
that in the Great Depression because the
situation is so bad
and it's it's you know people are
starving on the street and feel for
humanitarian ethical reasons it's not
okay to say that the austrians though at
first Hayak and Lionel Robbins are like
this is a business cycle and it needs to
run its course and it will be
detrimental if we intervene and then
pretty soon Hayek has to change his tune
so the austrians are the most hardcore
in terms of Li Fair absolutely and so
Hayek will make the turn towards
accepting more of a state and then we'll
come to talk about how the state needs
to support what he calls a competitive
order but his mentor lud vanon mises
Still Remains very hardcore and is not
um really open to things like
unemployment insurance or um other other
state-based interventions what does vona
say about like human suffering that's
witnessed in the Great Depression for
example like what are we supposed to as
economists as humans that Define policy
see what are we supposed to see when
people are like suffering at scale yeah
I wish I knew an answer that question I
don't know enough about Von misus and
and his reaction in the Great Depression
I think I would Hazard that he
would look more to the down the road and
say well if you start here you're going
to go places that are are bad but I I
don't I don't factually know what he
said in response I do know that hak's
position doesn't last very long it's not
it it's not a position you can hold to
maybe you could hold to it in other
Cycles the other thing that was
interesting is I found very few
Americans um saying this it most who
were were kind of small town electeds or
the most famous is Andrew melon quoted
by Herbert Hoover so so not directly we
don't have him on record saying this but
apparently Hoover records in his Memoirs
that melan said something
like liquidate real estate liquidate
stocks you know Purge the rotness out of
the system people will live a healthier
life and certainly there were members of
the Federal Reserve who felt like it
would create they didn't say moral
hazard but it would create what we now
call moral hazard bad habits were we to
intervene and to save failing Banks
because failing Banks need to be taught
a lesson they need to be taught
discipline and so a lot of people I
think saw it in the context of
discipline this is discipline and if you
remove the discipline um you'll be
taking away something fundamental in
society so Milton Friedman never quite
went all the way to L Fair no no he
didn't see that and what's really
interesting is the number of incredibly
radical proposals that he and his
teachers were floating so I've mentioned
Frank Knight another really important
influence on fredman was Henry
Simons who was a junior professor
Chicago and Simons had this idea for
what he called 100% money which would be
a law that says banks have to hold 100%
of the deposits they receive they can't
loan them out on the margin this would
completely and totally have overhauled
the US banking system and he would have
said there's a category of things called
Banks where you get deposits and then
there's going to be a category of sort
of he didn't say investment Banks but
investment vehicles that will invest so
similar to what did happen in in some
ways in the banking reforms in that in
the 1930s the the investment Banks were
split from the deposit banks and the
banks that took deposits were much more
highly regulated and they were supported
by the FDIC but the point being The
Chicago School had these very radical
proposals for reform go off the gold
standard um you know restrict the
currency you know change the banks um
immediately relief payments now what is
important to note though is that they
thought all of those as emergency
measures to get through the emergency
not as permanent alterations in the
state of of what had to be and not
permanent alterations between State and
Market where the Keynesian assumption is
things have changed times have changed
we're in a new dispensation and we need
a new relationship so fredman is very uh
Milton fredman is very open to doing
things differently in a state of
emergency he will have different IDE is
during World War II than any other time
and that's why I argue I think he would
have been supportive of at least the
first rounds of coronavirus relief
because I think he would have put his
emergency thinking hat on so in that way
he was definitely more
flexible you mentioned Hayek who is this
guy what's his relationship to Milton
fredman in the space of ideas and in the
context of the Great Depression can we
talk about that a little bit sure so fa
Hayek is an Austrian Economist who takes
up a posting in London and you know he's
he's in a mentor of a mentee rather of
lud Guan mises he's writing about
business Cycles um Austrian Capital
Theory and the depression hits and he's
one of the few you know economists who
in the beginning really is not calling
for much intervention although as he
realizes how politically unpalatable
that is he will develop more softened
version of Austrian economics that has
room for a whole range of Social
Services What's significant about Hayek
is that he is also watching what's
happening in Austria what's happening in
Germany and he's really worried the same
thing is going to happen to the Western
democracies and he sees the root cause
of this is socialism the shift towards
an expanded role for government which
we've been talking about it's happening
in the United States it's also happening
in Britain and so he writes this book
that becomes is incredibly famous the
road to serfdom basically saying taking
these steps towards a a planned economy
or an economy that's a modified form of
capitalism is going to could he's very
clear that this is not an inevitability
but if the same steps are taken and
people follow the same line of thinking
we may end up in a sort of coercive um
totalitarian state so this becomes
enormously popular in the United States
first of all he's in good touch with
fredman's teachers even before this book
comes out they see them as Kindred
Spirits Frank Knight is in touch with
him Henry Simons is in touch with him
they all see themselves as liberals they
call themselves old-fashioned
unreconstructed liberals and so even
before he becomes famous Hayek will be
trying to kind of organize thinkers and
intellectuals who he believed shares his
values of what we would call today
Classical liberalism and to kind of
create a counter consensus to the one
that's Gathering now Hayek also chooses
not to argue against canes and he feels
that this is a huge missed opportunity
that he should have staked out the case
against canes and that because he did
not people come to believe there is no
case against Caines canes is literally
unanswerable so Hayek will have this
great
regret he will Channel some of his
regrets into sort of community building
specifically developing The Mont
Pellerin
Society um and it will fall to fredman
to really make that case against
canes but Hayek will end up at Chicago
and Hayek really influences fredman to
think about what hay calls the
competitive
order and how the
state can and must maintain the
competitive order that is the system of
laws of norms of practices that makes it
possible for markets to function and
this is one of these key differentiators
between the older philosophy of Le far
and the newer reconceptualization of
liberalism which says yes we need a
state we need a state that's not
intervening in markets under Social
Democratic aaces but is structuring and
supporting markets so that they can
function with maximum
Freedom keeping in mind that if there
aren't basic social supports needed the
market is apt to generate the type of
either inequality or social instability
that will the whole system into question
so Hayek is really key in promoting this
modified
liberalism but from being a very
prominent Economist in the 1920s and
1930s as mathematics becomes the
language of eon economics hyek is
completely left out in the cold now
fredman to some degree is left out in
the cold but fredman at least has proved
the mathematical Economist that he knows
what they're up to and he's rejecting it
from a position of expertise and
knowledge
and he literally drives the mathematical
economists out of Chicago they're
clustered in a group called The Kohl's
commission and he makes their life hell
they they they have to they flee they
flee the fredman ons slot but then when
Hayak arrives at the University of
Chicago he would like to be considered
for a position in the economics
department and fredman Milton Freedman
says no way you're not really an
economist because you're not empirical
because you just develop these theories
so so he has an appreciation for hyek as
a social thinker but not as an economist
so what fredman decides to do his answer
to KES will be deeply empirical but it
will also be theoretical and it will
create an alternative intellectual world
and approach for economists who aren't
satisfied with keynesianism and almost
singlehandedly Freeman will introduce
sort of political and ideological
diversity into the field of economics
because from his Beach head in Chicago
he will develop the theory of
monetarism so what is monetarism the
easy way to summarize it is this famous
dictum of of Milton fredman's inflation
is always and everywhere a monetary
phenomena and it's fascinating that he
becomes an expert in inflation because
the first
research and the first major research
product of
monitormusicpatternphotographyproductssci
of the Great Depression in a monetary
History of the United States and that is
a theory of a deflation all prices going
down and he will go back to an idea that
Irving fiser had popularized but a very
old idea almost a truism the quantity
theory of money which says the level of
the price level is related to the amount
of money circulating in an economy so if
you have more money prices go up if you
have less money prices go down now this
seems like very basic and almost almost
too basic to bear repeating but fredman
is saying this air basic relationship
holds true even in an advanced
industrial economy and that is what
people have started to doubt and if you
think about money you think about Banks
you don't think necessarily about the
federal budget spending and Taxation and
what you see happens in American
economics the textbooks previous to the
Keynesian Revolution they spent a lot of
time on money they spent a lot of time
on interest rates you can C you can do
word counts and and other Scholars have
done the word counts and then word count
for money after World War II just
plummets and you start seeing things
like taxation budget those things go up
so that the what happens is the the
economics profession shifts its
attention it just looks away from money
to other things and fredman is one of
the few who's saying no money still
matters money still counts and it's a
very counter intuitive argument to make
it's a very historical argument to make
and this is absolutely fascinating to me
with Anna Schwarz he develops this
150e time frame he also has students
working on episodes of
hyperinflation in different periods of
time he's also looking back to like
ancient history inflationary episodes
there and he's saying this is a this is
a law of Economics this is something
that recurs throughout time it's not
historical right it's not contingent
it's to law of economics and you know
his keyy and counter points are saying
no that's not relevant any longer maybe
once it was relevant but it's not
relevant today now in some ways they
have a point
because the in order to pay for World
War II the federal
government sells a lot of bonds IT
issues a lot of debt and it wants to pay
this debt back at a low interest rate
and it wants people to keep buying it it
wants the low interest rate to be
competitive with other interest rates so
it wants in general low interest rates
throughout the economy and the Federal
Reserve has been so discredited by the
Great Depression that the treasury
basically runs the Federal Reserve and
says keep interest rates low and so
that's what it's doing and so the
Federal Reserve has stopped being an
independent entity it's it's just a sub
sort of Department of the treasury but
in 1951 they negotiate What's called the
treasur fed Accord and the Federal
Reserve gets its independence but it
doesn't really use it but statutorily it
now has it and so most economists are
just observing a regime in which the
Federal Reserve has no power a regime in
which there is really little inflation
the inflation that is seen is post a
little burst of inflation in the Korean
War um and there're saying inflation's
not really important it's not really
relevant and money's not really relevant
and important and so to break through
and to make the argument that's why
fredman and Schwarz go to history and
they're able to make that argument for
history so then fredman is coming out
with a variety of papers that are
saying you know when I look at economic
fluctuations he Maps them side by side
to fluctuations in the money supply and
says look they fit and other economists
remember they're building complicated
mathematical models and Freeman's doing
extremely simple stuff and they just
think it's dumb it's not interesting
it's not true they just they don't buy
it at all and so um but after a monetary
History of the United States they have
to pay attention so it's really in those
years Freeman is hammering this idea of
monitorisation
you're heading towards a monitor
position now at the same time Freeman
comes out very publicly in 1964 is a
supporter of Barry
Goldwater and keyy and economics has
found a home in the Democratic party its
probably brightest moment in the sun is
the administration of John F Kennedy who
brings in a lot of Harvard and Yale
professors to the Council of economic
advisors he proposes a series of
spending programs that are really guided
by the Keynesian philosophy and iberry
Goldwater is tremendously controversial
part for his votes against civil rights
which fredman really supports in part
because he's a hardcore libertarian in
an age when that's not in the political
mainstream or not discussed in the
political mainstream and I mean he's
just tremendously unpopular particularly
in all the educated precincts where
fredman lives so fredman is like an
outcast on a pariah for his support of
Goldwater and so that actually really
affects mon ISM because people feel that
this is now becoming a package deal and
so there's a great reluctance to embrace
freedman's ideas because it seems like
you would then have to embrace his
politics uh so it's associated with with
conservatism so this is the years when
conservatism there is a movement that
calls itself conservatism and fredman is
very tightly allied with this movement
from the beginning partly through his
friendship with William F Buckley
and a lot of people say to me yeah but
fredman's not conservative and this is
like a bigger we have a whole separate
podcast on this but for now I'll just
say that conservative in the United
States becomes a political brand that
contains elements of conservatism that
are recognizable across time and space
Embrace of tradition or comfort with
hierarchy Etc and it also has something
new and different which is fredman's
ideas is about Milton fredman's advocacy
of more free markets less government
regulation and the benefits of
capitalism and the benefits of freedom
and that gets folded into American
conservatism in part because Milton
Friedman is such a powerful intellectual
figure and after his advocacy of
Goldwater the media realizes this guy's
really smart he has really interesting
things to say he makes great copy he
makes a great guest and he starts
writing a column for Newsweek magazine
which is very big deal in a much more
Consolidated media environment and he's
quoted in all the newspapers and so his
public profile really starts to rise
right as he's pushing
[Music]
monitormusicpatternphotographyproductssci
sell stuff and there's this fascinating
complex dynamical system of people um
Contracting with each other in this
beautiful way I mean there's so many
pothead questions I want to ask here
about the nature of money I mean money
is fascinating in that way and for I
think for for Milton
fredman uh trusting the the flow of
money is really important yeah and the
signals that pricing and money in
general provides is uh really important
so yeah and some of this uh I could take
some of this back again to Frank Knight
so one thing Frank Knight said to all
his students was the market is the best
allocation mechanism we have the market
is what allocates resources in a
situation of scarcity the market
allocates them the best and Hayek will
add to that by saying prices are
information signals and a price sends
information to buyers and sellers about
how they should act act and these are
the two of the strongest Arguments for
why the government should not intervene
in the price system because it will blur
information or because it will allocate
less efficiently than Market allocation
will and so what Freedman is really
going to add to that is maybe going up a
level and thinking in the macro about
the whole economy and how money
circulates through that economy as a
whole and so what he and hna Schwarz do
is they construct what are called
monetary Aggregates this is adding
together say all the money that's on
deposit in Banks and all the money
that's believed to be circulating in
people's wallets and you also have to
really go back in time you know we don't
have credit cards um there is a stock
market but it's tiny in terms of the
number of people who invest there aren't
mutual
funds uh you know like when Travelers
check checks are introduced this is like
a big deal um so we have a much a very
simple monetary system and so um shorts
and and Milton Freeman start measuring
what they call the monetary Aggregates
they focus on M1 and M2 and their
favorite aggregate is M2 which I believe
is encompassing sort of deposits and
circulating medium the other thing to
recall it there's some fine distinctions
between
um uh money in savings accounts and
money in checkings accounts and money in
savings accounts can earn interest and
is generally believed not to circulate
or money in checking accounts does not
at that time bear interest and cannot
legally bear interest and so is thought
of is circulating and then there's
different institutional architectures of
postal Savings Banks and Credit Unions
so but fredman is one taking the focus
to these aggregate amounts of money and
saying um these really have a lot to do
with economic booms and busts when we
have an expansion in the amount of
available money we see an expansion in
economic activity when we have a
contraction in available money we have a
contraction and so he says at this stage
the government through the mechanism of
the Federal Reserve and its influence on
interest rates can either make money
more cheaply available and more freely
available in the economy or can make
money more expensive and slow things
down but the the central core idea of
monetarism is this is potentially very
bad if the government can hit the gas
and then hit the break and hit the gas
and hit the break based on say what a
politician wants or what somebody the
Federal Reserve wants you have a lot of
instability in the system and so
one of the core policy proposals of
monetarism is let's grow the money
supply at a steady rate and in the
beginning fredman just says K percent he
doesn't even put a number on it because
he says the number doesn't matter what
matters is the steadiness in the growth
rate because if it's a steady growth
rate it will fade away and then people
will make economic decisions based on
the
fundamentals not based on what they
think is going to happen not based on
hedging against inflation or hedging
against deflation they'll just be able
to function so this is sort of the
Paradox of monetary policy when it's
happening right you don't see it you
don't notice it when it's happening
wrong fredman argues it can just
fundamentally destabilize everything it
can cause a Great Depression can cause
an artificial boom and so he's taking
monetary policy at a time when most
economists think it's completely
irrelevant and saying this is the
central game of the economy now we live
in a world where we believe this and the
Federal Reserve chair can't open their
mouth without headlines being generated
m fredman is saying this at a time when
the Federal Reserve is like a mysterious
and secretive organization it's not
welln it's not deeply appreciated some
of the only people who appreciate the
fed's power are like hardcore rural
populace um who have constituents you
know who think the banks and money power
are the problem who are like you know
Throwbacks from the frontier days so
fredman in the beginning has no
constituency for this policy he has no
constituency for this analysis and so
just going back to summarize monetarism
it's looking it's using the quantity
theory of money to analyze the
macroeconomy it's proposing a policy of
slow and steady growth in the money
supply
and then it is arguing that inflationary
episodes when they emerge are profoundly
driven by changes in the money supply
not by anything else I mean and going
even up a level as we
started how epic is it to uh develop
this idea to hold this idea and then to
convince the United States of this idea
that money matters uh that today we
believe is mostly
correct uh for now yeah and so like just
this idea that goes against the experts
and then eventually wins out and drives
so much of the economy the biggest the
most powerful economy in the world so
fascinating yeah so I mean that's a
fascinating story and so what happens is
fredman has advanced all these ideas
he's Royal the economics profession he's
built a political profile and and then
he becomes the head of the American
economics Association and he is asked in
that role to give a presidential address
and so he gives his presidential address
December
1967 and he says um I'm going to talk
about inflation and I'm going to talk
about the tradeoff between inflation and
unemployment and this is what's
generally known as the Phillips curve
and the Philips curve in its original
form is derived of post World War II
data so it's derived of about 12 years
of data and it shows that when inflation
goes up unemployment goes down and the
idea you know would make sense that as
the economy is heating up and lots of
things are happening more and more
people are getting hired and so this
relationship has led policy makers to
think that sometimes inflation is good
and if you want to lower unemployment
you could let
inflation kind of go a little bit and in
the crude forms it becomes to seem like
a menu like you could take your model
and you could plug in I want this much
unemployment and it would say well great
this is how much inflation you should do
and so then you would Target that
inflation rate so Freeman gets up and he
says this is wrong this might work in
the short term but it's not going to
work in the long term because in the
long term inflation has first of all it
has a momentum of its own once it gets
going
it tends to build on itself the
accelerationist thesis it accelerates
and once inflation gets
going it and the reason it gets going is
because um you know workers go to the
store and they see the price level is
gone up things have cost more they asked
for the wages to go up then um you know
people eventually the wages will go up
too high and they will no longer be
hirable or companies will decide at
these high wages I can't high as many
workers I'd better lay off so if
inflation keeps going eventually over
the long term it will result in high
unemployment so he says theoretically
you could end up in a situation where
you have high inflation and high
unemployment this hasn't been seen but
he says theoretically this could happen
and then he goes and he says and the
government has started expanding the
money supply started expanding the money
supply in 1966 so we're going to get a
bunch of inflation and then we're going
to get a bunch of unemployment and he he
estimates about how long it will take
and then he says once this all happens
it will take about 20 years to get back
to normal and and he predicts the
stagflation of the 1970s stagflation of
the gangster is that for an economist do
that again against the the mainstream
belief represented by the Philips curve
yeah and what's really what really makes
it happen is that many of the economists
who most deeply dislike fredman and most
deeply dislike his politics in the 1970s
as as they're running their models they
start to say fredman's right they start
to see in the data that he's right and a
very parallel process happens in Britain
Britain is going through a very similar
of burst of spending burst of inflation
and so Freedman is Vindicated in this
very profound way in the way that he
himself said would be the ultimate
Vindication which is my theory should
predict so that prediction of
stagflation is really the sort of final
breakthrough of his ideas and also you
know their importance to policy um and
to thinking about how we should
intervene or not in the economy and what
the role of the Federal Reserve is
because he's saying the Federal Reserve
is incredibly powerful and finally
people start to believe him and I don't
know if we said but to to make clear
stack infation means high unemployment
and high inflation which is a thing like
you mentioned has not was not seen
before and he predicted accurately and
it also disproves the sort of the the
relationship the inverse relationship
between um unemployment and inflation
yeah now I should say the Philips curve
is still out there it's been
expectations augmented and it is
relevant in the short term but fredman's
warning is still very much apt that if
you get too focused on unemployment you
can let inflation out of the bag and so
until very recently the Federal Reserve
tradition has been focusing on inflation
believing that's fundamental and that
will keep unemployment low rather than
trying to lower unemployment at the cost
of raising inflation can we go back to
uh Frank Knight and the big picture
thing we started with which is the
justification of capitalism yes so as
you mentioned Milton Freedom search for
a moral justification of capitalism
Frank Knight was um a big influence on
Milton Friedman and including on this
topic of understanding the moral
justification of capitalism I I think
you spoke about ni's case for capitalism
was grounded in the idea that the
ability to act in the face of
uncertainty creates profit and it should
because taking risks should be rewarded
so like this idea that taking risks in
the face of uncertainty should create
profit and that becomes a
justification that it the the ethic of
capitalism can you just speak to that
yeah so Knight is talking about where
does profit come from and to his mind it
comes from the entrepreneurial function
and the risk-taking function and so he
kind of weaves that into why you know
capitalism works works best and why it's
the most effective allocation machine
and why it it assigns responsibility in
a way he believes that a socialist
system never could now night though is
not a booster of capitalism he could be
in part because he's just a Darkly
pessimistic kind of depressive guy and
so he's afraid capitalism is going to
collapse and Socialism or fascism is
going to take over or communism and so
he kind of descends Into Darkness there
fredman as as the more Optimist believes
with Hayek that you can develop a
different approach to capitalism that
would preserve the price system preserve
allocation but build in Social supports
build in a social minimum things like
this but there's a moment in his career
where he's really struggling to figure
out like how do I make this case for
capitalism and basically uh the whole
sort of conservative movement or people
who we later call the conservative
movement are struggling to make this
case and he starts thinking about what
makes capitalism work is that if you put
forth effort you get a reward so then
you could say well people get what they
deserve under capitalism but then he
kind of stops and he says that's not
really true because we're born with such
different endowments and there's a huge
quotient of luck right so some people
are just in the right position and some
people aren't so if I say capitalism is
moral because people get what they
deserve that's not really true and he
also kind of has like a an ethical
reaction which he ends up calling like
an aesthetic reaction he's he's kind of
like it just doesn't feel right to say
that and so he struggles for a while
with like what do I say and then he
basically says capitalism it can't be
the core discipline the market can't be
the core to your ethics it has to be
something else so that's when he will
decide it's Freedom it's individual
Freedom that's really the ethical core
and capitalism makes individual Freedom
possible because capitalism is dedicated
to maximizing that and so the defense of
capitalism comes through freedom and at
his stage in history he's able to set
aside nice worry about inequality and
say when I look at the data and this is
true for the macro data
Century incomes are actually converging
right and it also if you look
historically if a country goes from say
a more feudal agrarian society to a more
market-based Society incomes will
converge now then they might start to
diverge but fredman's in the moment when
he's seeing the convergence and so
that's what he's really focused on so he
believes he can justify capitalism
through the ethic of freedom and he also
believes that
inequality um is a problem that can be
addressed through specific policies and
it's not a fundamental feature of
capitalism in other words he doesn't see
capitalism as an engine of inequality
the way that Frank Knight did and the
way that you know maybe some Critics on
the left would how did he conceive a
freedom so individual Freedom economic
freedom political Freedom civil Freedom
what was the tension the dynamic between
those different freedoms for him so he
really begins focusing on economic
freedom and he says it's really
important to focus on economic freedom
because in the United States we don't
value it enough so by economic freedom
he means the ability to um keep what
you've earned um the ability to make
decisions about your business the the
ability to make decisions about the work
that you do so this will translate into
things like um there shouldn't be a
minimum wage he believes the minimum
wage has bad social effects but he also
believes you should be free to accept a
job at a wage that you yourself have
determined is acceptable to you um and
there should be very minimal regulation
questions around safety and other things
because the market will ultimately if
you create an unsafe product it won't
sell and that will be that's sort of
your incentive so so he he really
centers economic freedom because he
thinks especially and he's really
speaking from his vantage point in the
universities and speaking to the kind of
liberal consensus of the 50s and 60s he
thinks economic freedom has been
undervalued in the American context so
he really wants to push that forward
he's really kind of taking political
freedom for granted
now later in his career when he becomes
famous he's traveling the world he
spends time in Chile and this country is
now being ruled by a dictator uh gustu P
who starts introducing economic freedom
but there's no political freedom and
Milton Freedman believes eventually
these two things are going to go
together he tells P you've got economic
freedom and eventually it's going to
bring it's going to mean political
Freedom p is like okay fine not really
interested in that I want to know what I
should do about inflation
but then when Milton Freeman leaves
Chile he is attacked and vilified for
having been a supporter he's is
interpreted that he's a supporter of the
regime which he's not but he realizes he
has talked too much about economic
freedom and he hasn't talked enough
about political freedom and he's kind of
assumed political freedom because he's
come from the American context so then
he starts recalibrating them and saying
you know what if you don't have
political Freedom you're never going to
be able to hold on to economic freedom
so he sees that they need to go together
and they don't naturally go together and
so he starts to become more clear in
talking about political Freedom now
let's fast forward to the end of his
life and he's witnessing the emergence
of what we call the Asian tigers so
capitalist economies that are doing very
well but they don't have political
freedom but then he observes they don't
have political freedom and that you
can't vote in a free and fair election
but they also don't have a statti they
don't have a KGB they're not you know
hauling people off for their wrong
opinions so then he says they have
something called Civic freedom and so he
kind of defines this third sphere Civic
freedom of you know debate discussion
interpersonal relations but you can't be
political
so this is a late in life addition I
don't think it's fully theorized I think
what it shows is that during the Cold
War he very much believed economic and
political Freedom you know capitalism
and freedom democracy
the United States capitalism this all
went together and he starts to see at
the end of his life the emergence of
different social systems that are using
market trading and allocation but aren't
giving people similar freedoms and he's
kind of puzzling over that now he always
believes that China will democratize and
he thinks China's on the path to
democratization in part because Chile
does democratize eventually p is voted
out and it's become a democratic
capitalist and very prosperous country
and he thinks that's exactly what's
happening in China he sees tenanan and
he doesn't live long enough to get to
where we are now in which doesn't look
like political or Civic freedom is
coming to China anytime soon and he did
oppose the Dual track system of China
meaning like the market is bottom up the
government in China is top down and you
can't have both he thought you couldn't
have both yeah he thought eventually the
market would Triumph well it's a really
powerful idea say okay maybe there's not
political freedom but just hold on to
the economic freedom and eventually
that's going to give political freedom
is that is that correct to say like
start to work on the economic freedom
and the political Freedom peace will
take care of itself that's what he
believed that's what he believed yeah I
think it's it's more complicated than
that right the the people who gain out
of a system of economic freedom could
decide to collude in a system where
there isn't political Freedom um that's
certainly a scenario
so but but that that was again that's
that core idea of freedom right and that
core belief that people want freedom uh
and that people are drawn to Freedom
just to go back to Frank Knight a little
bit he wrote an essay called the ethics
of competition the metaphor that
economic life is a game and then maybe
that extends the society as a whole like
the entirety of it is a competitive game
and
uh and Milton Freeman I think adapted
some of this appreciated some of this as
can you speak to this metaphor yeah I
think what the metaphor of the game does
is it asks you okay well what are the
rules then um and let's focus on the
rules that keep the game going so he
didn't use the concept of an infinite
game but I think that's an interesting
one you know a game that all the players
are in and keep going again and again
and again and so that helped Knight
along with
hyek shift
from the allocation question who's
getting what is are things allocated
Fair
to the more structural question of like
what are the rules of the game that we
need to keep this system going and so
for a while that led to the discussion
of Monopoly well we need rules against
concentration um or we need the rule of
law um everyone needs to be treated
equally people need to know what um you
know what they're up against and then
going back to monetarism the core of
monetarism is a rule Freeman called it a
monetary growth Rule and so again what
keeps the economic game going is a rule
about how much the money grows that
everybody knows nobody's guessing
nobody's changing the rules to help
their side or to help you know the
people they're friendly with we all know
it's there it's clear it's easy and so
that emphasis on rules I think really
has a through line it goes into highx
competitive order and then it goes into
the monetary growth Rule and then you
know
today monetary policy makes use of
monetary policy rules we have not
abandoned discretion but rules are used
as a heuristic or a check and those come
out of freedman's thinking and so um
it's something it's it's really profound
and it was always counterposed to
discretion which Freedman worried would
be subject to capture or political
corruption if you had discretion in
policymaking if you had discretion in
these very big areas um then people
would stop competing against each other
in a market and they would turn their
attention to getting control of the
rules or the rul makers so if there's
clear transparent
rules then you're free to play the game
yes exactly but then depending on the
rules the the game can turn out the
equilibrium that it arrives at might be
different right so that that's speaks to
the the mechanism design the design of
the rules yeah and that was again to go
back to the idea
separating new liberalism or
neoliberalism from Classical liberalism
was more of a focus on what are the
rules that are needed what is the
competitive order that we want to set
out how do we design in Social
safeguards um how do we think about it
and so that shift towards monetary
policy and focusing on stable monetary
growth that becomes really important in
the post 70s era
is one of the basic rules of how
capitalist economy should function and
it becomes really important because I
see the example of say countries most
notably in Latin America where monetary
rules weren't followed and different
governments played politics with their
currencies and that created huge
upheaval and huge social loss economic
loss just economic disaster so uh my
friend Liv she's a poker player
philosopher of sorts great human being
she has a podcast called win-win that
everybody should listen to and uh the
whole purpose of the podcast and her
whole way of being in spirit is to find
win-win Solutions so do you think of
economic life as having such win-win
Solutions so being able to find rules
where everybody wins or is it always
going to be zero some I definitely
believe in win-win but with a big
asteris like you can have win-win
but it can feel like win lose which is
it's not just are people getting more it
has a lot to do with do people feel
they're getting more and do people feel
they're getting what's fair and equal so
you could have a
situation um you know for instance if
you look at the history of going back to
Chile it has steady growth steady income
growth steady dimunition of inequality
and a high level of discontent within
the society and a high level of belief
that the society is corrupt and unfair
and that's what matters how people feel
about it how people perceive it matters
and you can't you know we saw this
recently you can't just come out with a
bunch of statistics and tell people
you're winning in this game if they feel
like they're losing so that goes to all
the nonrational factors and all the
comparative um factors that people have
when they think about where they are
Visa other people in society so we're
just incredibly social creatures we're
incredibly attuned to our status to
rising and falling to where we sit Visa
others and so that absolutely has to be
attended to it can't just be an economic
analysis that's so interesting that the
experience of the economy is different
than the reality of the economy you know
on the topic of
corruption I think the reality of
corruption versus the the perception of
corruption is is really important in a
lot of these nations you take Ukraine
for example the perception of corruption
has a big impact on the economy you
don't want to invest you you're very
cautious as a business person the
reality of corruption could be way
different than the actual perception but
if narratives take hold it uh it's a
self-fulfilling prophecy that it has a
big effect on the the psychology of the
people involved it's interesting yeah I
mean this goes back to K's analysis of
the Great Depression right if people
won't invest if they're spooked if the
investing classes are
spooked you could be in real trouble and
in some ways the simple analysis of the
problem and proposal of a solution was
enough to
restore um eventually the path to
economic Prosperity right that's
Franklin Roosevelt nothing to fear but
fear itself you know the sense of we
know we have a future we have optimism
then you believe in it and to go back to
like thinking about money right money
works because we all believe in it
you know it's it's a form of social
trust and it's a it's a form of belief
and faith in our society and in the
other people in it and when that breaks
down the money system will break down as
well is there something that Milton
fredman said and thought about you know
how to control the psychology of humans
at scale no I mean it what's interesting
is he does talk especially in his later
work he says we have fiat currency and
this is an experiment you know and don't
know how it's going to turn out and it's
turning out okay right now but we've
always had a commodity B based or backed
currency of some form or another and
this is the first time and so so who
really knows so far so good um and he
also is very attuned it's interesting in
his later writings when he's thinking
about this to sure I could design a
monetary system that would be different
but when I look at history I see that
monetary systems have always say
Incorporated the role of the state um
because it's so important to people and
so therefore my theoretical designs
really have to be tempered by what I've
actually seen happen in history so maybe
we could speak to this tension between
how much government intervention is okay
for Milton freed so he was against
minimum wage but he was for guaranteed
minimum income can you explain actually
the difference between the two yeah so
this was one of the discoveries I made
in my research I found a paper from 1938
he wrote advocating what we would call
today a universal basic income a minimum
income and he basically sees this as
part of the effort to create a new
liberalism right and he basically says
we have advanced societies we have
prosperous societies we have decided in
keeping with our morals and our ethics
that people should not be starving in an
advanced Society like this the question
is how are we going to make that happen
and he ended up believing the best thing
to do was to put a floor under everybody
and he said you can get that based on
your income if you have a lot of income
you don't get it if you have a little
income you might get a little bit of it
if you have no income you get enough of
it and he believed in the beginning you
should base that on you know what was
required to buy food right that that
would be kind of an objective you could
objectively determine the nutrition and
the price of food and so that for him
it's important he says it's keeping with
a liberal polity because it's not
intervening in the price system it's not
intervening in economic relations and it
does not in his view require a
bureaucracy to administer it is not in
his view require that you qualify for it
by virtue of being in a protected class
you just get it as kind of part of your
membership in this General citizenship
body and so that did him was really
different than a minimum wage because it
did not interfere with
the work bargain his belief about
minimum wages was specifically that it
priced out unskilled labor that what an
unskilled laborer had to offer was the
willingness to work for a very low wage
and if you set the minimum wage too high
businesses instead of hiring that higher
pric labor would not hire or like we
could think of today right they put an
electronic checkout you know or
something like this where you don't
actually need the labor so he really
believed the minimum wage had that per
verse incentive now there's this is a
live debate on what minimum wages do and
there seems to be a level at which you
can set them that they can not have that
perverse effect and in fact can kind of
create people with more spending money
that then Powers the economy so he had a
a very sort of clinical analysis of that
uh rather than an empirical one or a
really abstract analysis but the the
minimum income is fascinating because it
seems very leftist to us but what it is
is it's
purely
individualistic and it it never really
happened because it was so purely
individualistic because American social
policy T typically identifies like this
group of people is deserving and we'll
give them benefits so the classic
example is soldiers veterans another
example is Mothers raising dependent
children these people deserve money the
rest of you you better go out and work
and so fredman's proposal it really
caught on in the 60s It ultimately went
nowh but it was no litmus test um no
income analysis just we're going to give
you this much everyone's going to get
this much and he decided once Mass
taxation had come in you could do it
through taxes and you could just rebate
people who didn't pay income taxes got a
rebate that actually came to pass it's
the earned income tax credit and it's
considered extremely successful you know
by policy analyst it does what it's
supposed to do it's not that expensive
and so I see that as a kind of paradigm
of his thinking in that instead of
creating a bureaucracy that does some
form of redistribution or instead of
trying to intervene in the market for
labor or the market for something else
the market for housing you provide a
cash grant that people spend for
themselves and so interestingly that's
what happened in the emergency situation
of Co right that's exactly what people
did they follow that model we just get
money out quick and there's a lot of
disc still about Ubi is something that
should be done and I think it's always
going to be hard to pull off because I
think Americans and their elected
representatives don't want to provide a
universal benefit they want to provide a
targeted benefit because they believe
there's like a moral component here and
fredman advanced a policy that was
really
abstract and really just you know kind
of it was devoid of judgment it was like
pure and beautiful in that way but like
utterly impractical and and it really
focused on not interfering with the
market and the signals that the market
provides like it was really against
price controls the kind of Reason yeah
exactly and you could say okay but how
does this not interfere with the market
right if you provide people with a
minimum income won't that change their
incentives to work etc I mean there's a
big body of research on this most of it
seems to show um one it's way better
than the current benefits Cliff where
you have to not work to get your
benefits
um and any incentive impact on working
seems to be much lower than than would
be expected but I'll let the uh you know
the economists and the social scientist
fight that one out and figure it out
empirically hopefully we should be able
to yeah there's been a bunch of studies
it's interesting even just how you
conduct studies like this how you do
these kinds of experiments especially if
you're empirically minded you know CU
these a lot of the studies I saw are
pretty small right and so how do you
make big conclusions about um about how
to run the world how to run economies
from such small studies it's all a
fascinating experiment of
ideas and it's also inspiring to see
individuals and maybe small groups of
individuals like The Chicago School of
Economics to sort of shake up what we
believe and how we run the world yeah
inspiring yeah you call Milton fredman
the last great
conservative um maybe to be a little bit
sort of controversial and make bold
statements that get everybody excited
but uh what do you mean by that and what
makes a great conservative so I was
really thinking of that in terms of kind
of American political identities and
particularly the 20th century
conservative movement which you know
people are always saying this isn't
conservatism and I yes in America
conserv ism is different it looks
different it feels different
conservatism in America builds in a big
component of what we could call
libertarianism Pro
capitalism anti-government ideas and and
you know critics will say but
conservatism is about conserving
institutions and practices and it has a
role for the state and an organic
Community but in the United States it's
always had since the 20th century this
also this anti-statist
um let's let the Market rip let's not
worry about what the market does to
establish Traditions the market is our
tradition capitalism is our tradition so
that was really
synthesized you know many people were
there but fredman and the importance of
his books um freed to choose capitalism
and Freedom the television series he did
all of these were like core components
of this American conservative synthesis
as it evolved and I really see that as
having broken down it it is
is scattered into different pieces and
we don't know where they're going to
come back together again but you know
fredman's push for open Global markets
unfettered free trade that's getting
push back on both the left and the right
um you know that I think is just a major
sign that you know both parties have
turned away from this Vision I don't
know what they've turned to um but the
way that fredman brought these pieces
together I think that political moment
is passed so that's what I was trying to
talk about um with the book title
there's another way though in which I
think of him also as a conservative
which is that within the field of
Economics he went back to this older
idea the quantity theory of money and
said this still has value this can be
applied in the modern day it is
something to teach us and he you know
pushed back against this trend towards
mathematization so he kept writing books
he can still pick up a Freedman book and
read it you know where's of Economics
articles and output it's like unreadable
unless you're in the field and so I
think in that way he was trying to
conserve
methodologically and intellectually the
traditions of the field the work that he
and particularly Anna Schwarz did that
literal recounting of things and deep
analysis of data from the field that was
like completely unfashionable and it's
time now we've sort of gone back to it
with big data and with computers but he
helped bring that forward and preserve
that tradition so I think of him him
kind of intellectually as a conservative
if you think of the mode of his thought
and so I mean what makes a great
conservative is one who takes those
older ideas and makes them fresh for a
new time period I think that's
exactly what he did you've also spoken
about the fact
that the times when he was sort of out
in public the there was more of an open
Battle of ideas where conservatism often
had you know William F Buckley he had a
more uh
vibrant deep debate over ideas where it
seems less deep now I mean that is the
thing that it's hard especially like for
you know for the students I teach today
to be like you know there were arguments
about ideas and conservatives won a
bunch of them you know and that happened
in the' 70s late 1960s to 1970s when
they you know one set of arguments was
about economics like okay this idea of
stimulating the economy by spending more
it has a downside the downside is called
inflation um and the downside is called
too much regulation and you know you
you've gone too far in kind of bottling
up the actual sources of economic growth
and dynamism and we have to let those
free um in social policy there was also
a critique you know the the Great
Society had all these ways of ideas of
ending poverty and you know people came
and analyze them and said the programs
aren't helping in some ways you've
actually created engines to trap people
in poverty because you've given them a
benefit and said if they actually start
to work they lose the benefit you you
created these these all these perverse
incentives and these ideas were fought
out they were empirical they were
controversial um and they were based on
really deep research and really deep
argumentation and so um it seems that
era has passed it seems like we're
driven much more more
quickly um by moods rather than thought
through ideas right now it seems like
the ideas come after the they follow the
political mood and try to put together
the underpinning of it where it really
was the opposite for much of the 20th
century it does seem like we lead with
emotional turmoil right and the ideas
follow versus lead with the ideas and
the sort of the the emotion of the
masses respond right exactly so if we
think of the evolution of conservative
ISM it was a whole set of ideas that was
crafted refined the 1950s 1960s 1970s
sort of really found their emotional
standard Bearer translator salesperson
in Ronald Reagan who incidentally had
been following these ideas as they
developed and had been honing his
ability to express them and apply them
politically you know it's a very
opposite if we look at Trump as the
political definer of the era you know
there's a set of ideas but it was more
attitudes impulses Vibes and the ideas
are coming after that trying to figure
out how they patch on so um it's it's
interesting to watch to see that
difference and I Hazard that a lot of it
just has to do with the immediacy of the
media environment we're in and it's just
power of the media messages to get out
so
fast what do you think Milt Freeman
would say about Donald Trump
about uh him winning in
2024 and just in general this political
moment I think he would love Doge I
think that's you know goes without I
think he would focus on that part
because I think he would I think he
would really love it he would be very
alarmed by the idea of tariffs and very
alarmed by the return to protectionism I
mean I think he believed that part of
what made the world peaceful in the
second half of the 20th century as
opposed to you know during World War
two was the world was knit together more
by trade and that was the great hope
that people traded with each other they
wouldn't fight he was also you know a
proponent of the free movement of
capital you know he would absolutely
oppose this idea that you know nipon
steel wasn't allowed to invest in the
United States you know um I think he
would struggle and he wholeheartedly
embraced Reagan and he worked to
minimize the parts of the Reagan Legacy
he didn't like I think he would find it
harder to embrace Trump because he's not
of that style and he just had a
different style but I'm guessing he
would have come around through the an I
think he would just say okay we have a
chance to reduce the size of government
at the same
time the spending plans of the Trump
Administration are not fiscally
conservative in any way and that was his
concern was not so much with debt but
with the feeling that there's no
mechanis is M to stop the growth of
government that it just grows and grows
and grows and so he ended up believing
like even deficits aren't so bad because
they make politicians cautious he
thought about continuing to spend um but
I have to believe he would be concerned
about the potential threats to the US
currency's position as the world's
Reserve currency with increased levels
of debt and spending um he was concerned
about low interest rates you know in the
you know he he died I think it's 200
2004 2006 but it was in the beginning he
didn't see the zero low bound but he saw
low interest rates and he said this
isn't necessarily good everyone's
talking about low interest rates as if
they're good but there should be a a
price on Capital there should be a price
on this it shouldn't be so low and so um
you know he had he had some of still the
kind of macro insights that I think are
important you wrote uh the Wall Street
Journal essay titled how inflation ended
neoliberalism and reelected Trump so can
we weave that into this discussion in
terms
of inflation and uh Trump what's the
main idea of the Essa so the main idea
is kind of looking back and saying so
today we have been living in a world
where people have been you know focused
on um monetary policy
uh steady monetary policy free trade
reducing regulation this is all called
the neoliberal era and my argument was a
lot of that arose was driven by
inflation so we have Milton Freeman
predict inflation in 1967 it starts
breaking out in the 1970s Britain and
the United States and every institution
was designed around stable prices and
once inflation broke out prices were no
longer stable so for example um tax
rates weren't inflation adjusted so if
you're um income went up because of
inflation you might bump from a low tax
rate to an extremely high tax rate but
you don't actually have more money on
paper you have more money but everything
costs more so you don't actually have
more money and your taxes have gone up
that kicks off the taxpayer Revolt
there's a whole shift of American
corporations towards focusing on
financial investments because the tax
breaks they used to get for depreciation
for building new factories are not
inflation adjusted so they no longer pay
off in an inflationary environment and
then when Paul vulker comes in in um
1980s early 1980s and starts fighting
inflation really pushes up interest
rates to bring down inflation and that
completely reorders the banking sector
because Banks had statutory legal limits
on the interest they could charge and
once General Market interest rates
exceeded that this proliferation of new
Financial forms to take advantage of
that so my point was the era we live in
was ushered in by
inflation and then everyone turned
against all the formulations we had and
said well these have hollowed out our
industrial base these have um we've got
too much immigration we've got too much
economic openness we need to reshore we
need to focus we need to turn against
all these things we need to spend more
we've
disinvested
and the net result of that turning away
I argued is people forgot about
inflation they really forgot it could
ever exist and you had a whole set of
theories on the left modern monetary
theory that basically said we don't
really need to worry about inflation we
can spend what we want and lo and behold
inflation came back and so my argument
is that is now open the door to the
presidency of Donald Trump which is
potentially a deeply transformative
moment that will change the size and
shape of government that may change our
foreign policy profoundly that may
change our immigration policy it may
change the demographics of our country
all of that in my thesis is that has all
been made possible by inflation and so
the great mistake of the past years was
to forget how fundamental inflation was
to the rise of the last political order
and to profoundly
underestimate how much
inflation would change the current
political order so I just think it's one
of these things this is why I think you
should study history because I think if
you had studied history you would be
aware of this and it's so easy for
people to forget just like the banks
forgot that interest rates could ever go
up they got so used to it and it's it's
only a 10 15-year thing but to them that
seems like forever so I really do
believe what history teaches you to is
just have a much vaster scope in your
vision and then take into account the
possibilities of so many things
happening that are different than what's
happening today and so I just hope we
don't forget about inflation entirely
but here's the thing is a quite a strong
chance that Trump's policies will
initiate even worse inflation and then
they will prove to be his undoing so the
ironies of inflation could be
continuing like you said Milton fredman
would be a big fan of Doge so if you was
still here today and rolled with Elon
Musk and um what advice would he give
what do you think he would focus on in
terms of where to cut how to cut how to
think about cutting you know his his
signature policy move I talk about this
is taking um the price mechanism and
trying to make that into the policy and
that seems sort of obvious to today but
in the era that he came in so um there
would be rent controls let's take away
rent controls let's let housing prices
set themselves or um he was very against
national parks I actually think the
national parks are good so I hope the
Doge people don't take this up
but that rather than an allocation to
fund the national parks they should be
funded by the revenue that they bring in
when people visit them and so I think he
was always looking to let's let prices
make the decisions here so I think that
would be one of the key pieces the other
thing I think you'd really be thinking
about he he wrote about this a lot about
um occupational lure and barriers to
entry and he felt like one of the worst
things that government does um and
sometimes it's private entities that do
this is create barriers to entry to
protect Industries and markets so he
talked about this in the case of the
medical profession which I think is
actually not a good example because I
think we all have a collective
investment in having medical doctors be
highly trained but so for instance you
could look at um you know nail
technicians or hair cutting there's
often these licensing requirements or
there's a sort of big Kur fuffle I think
it's the DC passed a law that to run a
child care center you have to have a
college degree well what does that do I
mean that disenfranchises a whole bunch
of wouldbe entrepreneurs who don't
happen to have a college degree but
probably could be really good at this
particular business so I think he would
be saying um look out for where private
interests have used the state to protect
themselves and clear away those types of
barriers and let um competition through
prices guide outcomes yeah so open up
for more competition and allow for more
signals from the market to drive
decisions and so yes which would
actually naturally lead to uh cutting a
lot of The Bu bureaucracy of government
I think the other thing he would
probably be arguing for is again going
back to the design of of the the minimum
income or the negative income tax that
there's a way he R and ultimately
decided to run it through the tax system
right the government's already
collecting this data they already have
your information and they can just send
the money out through the system rather
than having a social bureaucracy where
you have to come in in person you have
to fill out forms you have to document
do you own a car what's your income who
lives in the household so I think he
would say and his analysis of that was
what that who that really benefited was
the the bureaucracy that processed that
paper you know that implemented those
norms and that if you could pull that
away you could get help out where it was
needed much quicker without having this
drag of people doing sort of
unproductive work of administering these
systems so I think trying to cut
administrative overhead and what he
didn't have then which we have now is
the technology that we have and the
ability you know to send benefits out
via smartphone or um just to just to
move so much faster and to handle
information on a mass scale so much
faster it's painful but I think one of
the big things you can do is just that
which is digitalize I don't know if
that's a word but just convert
everything to where the speed of signal
can be
instantaneous
so uh there's no paperwork it goes
immediately and then that means
that uh the pricing signals and all
these kinds of things are just
immediately available to people that
seems to be the lwh hanging fruit
government you know it systems could be
vastly improved him on but that would
result again with a lot of um people
getting
fired and I think somebody submitted a
question for me saying like
where's what are your thoughts as a
person who cares about compassion what
are your thoughts about government
employees which there's a lot of that
are going to be hurt by Doge yeah that's
it's always a really difficult question
a lot of people get fired to make room
for a new system that's going to lead to
a lot of pain there is going to be a lot
of pain I don't know what the solution
is I think I think that's also part of
why Freedman favored a minimum income he
talked about it being sort of counter
cyclical in other words when things were
really bad the spending level on it
would naturally go up this is what
economists today call an automatic
stabilizer um and then when it's not
needed the cost of it goes down um I
mean maybe there's a way to make it
sweeten it with honey and have people
take buyouts or things like that that
would certainly be a way better way to
go I did a podcast with Javier Malay he
has consistently praised Milton Friedman
and cited him as one of his Inspirations
so uh what do you think Milton fredman
would say about what's going on in
Argentina and what ja Malay is trying to
do in Argentina yeah I think he would
appreciate it I mean I think Malay is
much more of an Austrian inspired
thinker um but I think he definitely
appreciates fredman and on the macro
level fredman always understood it's
really painful to treat inflation um but
the more you put it off the harder it is
so I think he would be trying to get him
as he's doing to just message that
short-term pain long-term gain um I
think he'd be very supportive I think
he'd be thrilled to see also that Malay
is very good at explaining these
abstract ideas and putting his policies
in the framework of the bigger picture
that was really meaningful to fredman I
don't know how politically persuasive it
is overall um you know Malay is very
intense he doesn't have uh the same sort
of gifts of salesmanship and setting
people at ease that say someone like
Ronald Reagan had but it seems to be
that's what his country was calling for
right now so yeah he's yeah he is more
chainsaw less like warm blanket yeah uh
he uh Javier recollects this this line
from Milton Freeman I don't know if this
is accurate but if you strive for
equality over Freedom you often get
neither but if you strive for Freedom
you often get both do you think there's
truth to this you know I think on the
big picture definitely I mean we've seen
focusing too much on
equality can be because equality is such
an alluring word it can lead you to
downgrade all kinds of other things that
are really important but I really think
it depends on how you're defining
freedom I mean this the statement is too
is too big and too broad right so um you
know if you're talking about Freedom if
by Freedom you mean um not having to pay
taxes if you're successful you know I
think that can have all kinds of
knock-on effects right the idea that
people are able to prosper when they're
educated where is education going to
come from um how is that going to be
paid for and supported and again to go
back to night if you're generating too
much inequality or people are feeling
that you're generating too much
inequality um sometimes they value that
more than they value freedom and so I
think the balance I think there has to
be more of a balance and it's just it's
hard to make such Global statements and
you have to break them down into what
actually do you mean but again Malay is
coming from a very different context a
very different country that has seen so
much upheaval so much government
intervention so much inflation so much
political turmoil um he's probably
thinking about it differently than
fredman was thinking about it yeah I
mean there's a there was there probably
still is a real threat of
hyperinflation there seems to be a very
high level of corruption or the capacity
for corruption so it's a it's a really
messy situation so Javier Malay likes to
recollect this uh great line from Milton
Freeman that if you strive for equality
over Freedom you often get neither but
if you strive for Freedom you often get
both do you think there's uh truth to
this yeah I think in the macro for sure
I mean we've seen if you really put
equality as your goal it's such a it's
it's such a seductive ideal and people
believe in it so much that they can they
can carry out horrible crimes you know
in the name of equality but then
focusing on freedom I just these words
are too big they're so hard to Define
and so I think you have to ask sort of
like what is the freedom you're talking
about right if you're talking about the
freedom of ordinary people to be
entrepreneurial um to make their own way
to start new things to continue what
they're doing to keep what they've
earned for sure I think that can
increase the equ overall if you're
talking about um lower taxes if freedom
is just a code for lower taxes there has
to be I mean lower taxes in general
great but if you're one of the top uh
generators of wealth there has to be
some way to ensure that say education
right people Prosper when they're well
educated that's when economies do better
education is generally state funded and
you need some way to support that and um
provide for those inst tions that
structure society that make competition
possible so I think it's it's just a
really broad statement um but again
Malay is coming from a really different
context you know he's coming from the
south american context from such
upheaval such economic Devastation in
pursuit of the goal of equality that I
think trying to rebalance with that
emphasis on freedom I definitely see
where he's coming from if we can pivot a
little bit we've talked about
Reagan uh what are some interesting
stories about how Milton fredman
navigated the Reagan and maybe even the
Nix administrations and how he was able
to gain influence well the Nixon
Administration is an interesting case
because so I've been talking about
inflation and the different consequences
it had one consequence it had is that it
began to undermine the brettonwoods
currency system that was established in
the wake of World War II now Breton
Woods what it did basically it it ended
up inadvertently putting the US dollar
at the center of the world economic
system but under Breton Woods countries
of the industrialized West agreed to
trade their currency in set ratios that
government set so um a Frank was worth
so many dollars or a German Mark was
worth so many Franks and then also under
this system countries could come to the
United States and they could trade um
the dollars that they held for gold
because the US was on a sort of modified
gold standard there was
uh ratio of gold to paper money and so
this system was set up and very quickly
most countries were the dollar was at
the heart of it and that the converting
into and out of dollars was really the
mechanism of trade for many of these
countries so fredman said you know what
we should have is floating exchange
rates this is an idea again of instead
of having a top- down design of policy
an administered policy we will have
policy set by prices and you should be
able to trade currencies on an open
market they should trade and they should
fluctuate and that would be fine totally
outlandish
idea but he was pinpointing the fact
that Bretton Woods had an instability
and that instability began to emerge in
the time of inflation so you have more
and more dollars being printed they're
worth less and less if European nations
keep trading their currency for dollars
they're going to be importing inflation
into their own economies so they say we
don't want these dollars we'd like some
gold instead and they have the right to
go to the treasury send in an order and
get gold out and so they start doing
this more and more and it becomes it's
called the gold drain and the United
States starts running out of gold
they're aware this is happening through
the 60s they're trying various things to
fix it
and when Nixon comes into
office in 68 fredman sends him a memo
and it says
um this is going to be a real problem he
says something like it ah this is a
running soar and you have to Lance it
right away you know some very graphic
very nice metaphor uh otherwise it's
it's going to you know it's going to
explode and and Nixon just you know
files the memo away Nixon loved people
to think he was influenced by and
following the wisdom of Milton fredman
but he didn't actually want to do that
he he just wanted the a political
benefit that came from it
so then comes the moment where the US
Treasury Department realizes we're going
to run out of gold what should we do and
they everybody decamps to Camp David and
Nixon
decides we're just going to stop
redeeming uh currency for gold it's
called slamming the gold window shut
done and and he also at that same
meeting decides to Institute price
controls he does a whole bunch of stuff
it's an emergency he calls it the new
economic plan which is an unconscious
echo of the Soviet new economic plan so
uh a problematic name a problematic
policy and Freeman is livid at the price
controls but he's like actually it's
great that you close the gold window
let's go all the way to floating
exchange rates and this idea was heresy
within the treasury Department
everyone's very um committed to the idea
of the gold standard convertibility
possibility the United States at the
court the financial system kind of hem
andha but at this point fredman has a
very close relationship with George
Schultz and George Schultz is a high
level appointee who will eventually over
the course of an N administrations
become the treasury secretary and so
fredman is feeding Schultz all his IDE
ideas about how we should move to
floating exchange rates how we shouldn't
try to reconstruct Breton woods and the
people in
treasury it's it's funny because I've
read some of their accounts and actually
Paul vulker is in the treasury
Department at this time and he can kind
of sense that fredman is in here
somewhere you know like feeding a boss
ideas he doesn't quite know and you know
then in in the oral history Schultz
talks about this quite a bit so at any
rate fredman exerts this behind
the-scenes influence and what Schultz
does is just kind of lets Breton Woods
fade away he doesn't make Grand
pronouncements it just slowly the world
shifts to um a regime of they for a
while it was like a regime of steady
prices then they call it a steady regime
of changing prices or whatever the
language changes the reality changes and
they kind of end up where they are so
that's a real measure of freedman's
influence if there had been another
Economist in Schultz's ear that said no
catastrophe is imminent we have to go
back to Breton Woods he probably would
have worked harder the US government
would have worked harder and so that
becomes one of these pieces of
globalization and you know what people
don't realize is there used to be in
addition to these floating set Capital
ratios you couldn't bring capital in and
out of different countries you know you
had to register you couldn't invest were
all these rules and strictures and the
falling of Breton Woods really blows
that all open it's it's a precursor to
globalization so so fredman is right
there now he's very ambivalent about
Nixon I mean he sees that Nixon is not
an honest person he thinks he's very
intelligent um and Nixon Nixon's dream
is to create a new Centrist majority so
he does many things to go back on his
supposed economic principles and ideas
so fredman does not like this he doesn't
like the price controls he's in
communication with his old Mentor Arthur
Burns who's now the chair of the Federal
Reserve and burns is basically doing
everything wrong in monetary policy and
I described this in the book in some
detail these anguish letters back and
forth and basically as I see it bur
doesn't have a solid theory of inflation
and the more fredman pushes him it's
almost like Burns is willfully ignoring
fredman and kind of doing the opposite
of what fredman says so Burns is running
a very loose monetary policy inflation
is quite considerable over the 70s I
mean we were all spooked by what did it
get to 6% something like that recently
for a very short time this is inflation
going over 10% hovering in 8% for the
basically the Whole Decade of the 70s
going up and down with extremely
elevated rates and so the Carter
presidency largely Falls foreign policy
is a big part of it but the failure to
tame inflation is part of it and then
Reagan comes in and now Reagan loves
fredman and fredman loves Reagan very
mutual feeling the Reagan Administration
creates like an advisory economic board
fredman's on it he's he's retired now
you know he's entering his kind of
golden years he really has Reagan's ear
and here what he does is he convinces
Reagan of his theory of inflation which
is inflation has been caused it's a
monetary phenomenon that has been caused
by bad monetary
policy inflation has an accelerating
Dynamic the only way to end inflation is
by really showing and signaling that
government policy has changed and when
you do that it's very painful for a
short amount of time people will suffer
but then you will come out on the other
side into stable prices and this is what
you need for economic Prosperity so the
man who implements this policy Paul
vulker he definitely influenced by
fredman buys a big picture of fredman he
even buys fredman's specific technique
of the monetary growth Rule and of the
focus on monetary Aggregates which
fredman has said right Money Matters
Aggregates matter that's what money is
pretty quickly vulker finds that because
of inflation and the financial
deregulation in response to it the
Aggregates don't work the way fredman
said they would and so the specific
policy fredman recommends VOR tries it
for a year or so doesn't work super well
but what does work is letting interest
rates go high go above inflation to a
point where both the general citizenry
and the financial markets believe like
oh they're actually serious about
inflation and and because we've had a
decade of inflation with all these
presidents saying you know Ford we're
going to whip inflation now the monetary
policy is lost credibility this is why
people focus so much on credibility
today because once it's lost it's really
hard to get it back and one way vulker
gets it back is interest rates over 20%
unemployment very high as high as 25% in
like construction sectors and as this is
happening Milton Freedman is whispering
in Reagan's ear this is the right thing
stay the course this is going to work
now interestingly he hates vulker vulker
hates him and Freeman will never give
vulker credit for this policy but he
will give Reagan credit for this policy
but he owes credit himself for keeping
Reagan from wobbling on this policy and
just pushing it through and he also
tells Reagan very pragmatically you
better do this now you've got a
four-year term do this in the first two
years of your term things will have
turned around 1984 when you run for
re-election and you'll benefit from it
and that's absolutely what happens if we
could take a small tangent yeah sort of
a question I have to ask uh about since
we mentioned Bron woods and maybe the
gold standard maybe just have a general
discussion about this whole Space of
ideas there's a lot of people today that
care about cryptocurrency
mhm what do you think that Milton
fredman would say about cryptocurrency
and
um what role crypto might play in the
economy whether he would be for this
idea against this idea and if we could
look at it for today and also just you
know 10 100 years from now there's a
clip I think it's in 1992 where people
say oh Freeman predicted
cryptocurrencies because he's talking
about how payments will eventually be
electronic yeah um so in some ways he
definitely as he was looking at the
computer and money he knew these these
would come together in some way you know
I think um he probably would see a use
case for crypto he definitely would not
buy the stronger forms I think of crypto
ideology in which we could be heading
towards a future in which there's many
different currencies that compete or
that are distributed or there's a
stateless currency and he addresses this
very very clearly because a hyek
denationalization of money it's a paper
in the late' 70s you know Hayek argues
for this kind of competing currency
model or regime and so he's responding
to that he's responding to people
writing about Free banking and he
basically says look even if you
developed a variety of competing
currencies eventually society would
Converge on one and that's because
people just want one currency that they
know they don't want a bunch of
different options even in places where
there have been options to do that
they've been used very minimally and
then he says secondly the state always
steps in he says technically
theoretically it doesn't have to I could
draw you a model I could tell you about
how it could work without the state but
in actual reality all human societies
through time and space the state
eventually becomes involved in the
provision of money because it has so
many KnockOn effects to so many people
so sure I think he would again find a
use case for crypto think it's
interesting but I don't think he would
see it as this is going to displace
State money and we're going to have um
you know a variety of distributed
currencies the other thing he really
stresses is that a change in a monetary
system it only happens amid great great
crisis so again you see in countries
where the state is not controlling the
money well right that's when people are
more turning to crypto but he says
because money is so
fundamental there going to be so much
political pressure on any country that
gets the currency profoundly wrong that
the government will fall and another one
will replace it right so if you look at
episodes of
hyperinflation they don't go on very
long because they're so upsetting to
people if we can go back in time we've
we've talked about it a bunch but it's
still a fascinating time uh the Great
Depression University of Chicago there's
these folks like Jacob Viner Frank
Knight Henry Simons all of these influen
the thinking of Milton Freedman there's
this room seven situation University of
Chicago just going back there even just
speaking almost philosophically what
does it take to explore ideas together
sort of like deliberate argue in that
space and maybe there might be
interesting stories about that time it
would just be interesting to understand
how somebody like Milton fredman
forms the seed is planted and the flower
blooms yeah yeah so he gets to
University of Chicago he makes fast
friends and in his his third and fourth
year they become what I call them the
room seven gang so room seven is they
find an old store room in the basement
they take it over and that's where they
have their jam sessions and what made
this world come together was Frank
Knight there was a charismatic leader
and there were a bunch of acolytes who
clustered around him that I think was a
key piece of the ingredient and then
there was a sense that they were on to
something that the rest of the economics
field had forgotten or was rejecting so
there was like that of mission so that
seems to have been there was a formal
education piece and then there was a
parallel education piece rooted in
admiration for a thinker a shared
admiration and then what that led
fredman to do you know what I I found um
sylli you know that he had from
non-economics courses lists of books and
he'd written the prices of different
ones he wanted to read so he had you
know John Stewart Mill on Liberty like
50 cents written in the margin so he
began to educate himself he gave himself
a like parallel curriculum alongside
this very formal economics curriculum he
started reading you know the traditions
of political liberalism and then talking
them through with friends and developing
like a shared sense of mission and that
the incredible thing is of those friends
in the group you know they scattered for
like 10 years and then they all came
back together you know George Stigler
his great friend was hired at Chicago
Aaron director who was his wife's
brother was at Chicago so many of these
people continued he became Frank
Knight's colleague so that was the base
that was what really grew him that
really uh profound peer group now the
other piece I talk about a lot is
Freeman was a collaborator an
open-minded collaborator and he had
incredible connections with economists
who were women and he basically found um
first in the figure of Anna Schwarz
later in the figure of this group of
women who were his wife friends this
kind of untapped pool of talent and so
he immersed himself in this whole other
world of consumption economics and that
resulted in you know his more technical
work on um a theory of the consumption
function which is the theory of
permanent income so for fredman
intellectual work and intellectual
production was always done in this very
social context in a context that Blended
like friendship and intellectual
partnership and he really he only only
had a handful of friends who were not
also economists interested in the same
questions he was so he just lived and
breathed ideas all day long can you
speak to the jam sessions like what do
we know about the jam sessions what what
what are we talking about here you're
sitting in a room are they are they
analyzing are they reading papers and
discussing papers or are they arguing
more like over beers kind of situation
yeah more arguing over beers and in this
case there's several people who say it
was all about Frank Knight what did he
say what did he mean when he said it is
he right and so Knight was very he would
say one thing and then say another if
you read him it's very hard to follow
what he's actually saying because he's
full of qualifications and ironies and
blends and so he would throw out these
pieces and then the students would kind
of clutch at them and then they would
come back together and try to assemble
this sort of worldview and then Frank
Knight fell into this terrible
depression and to cheer him up they
planned a big party and they went back
through all of his previous writings and
they assembled them into a book that was
published this is the ethics of
competition and you can read the
introduction written in part by Milton
Friedman so not only were they talking
about Knight and what he said but then
they started pouring over his work and
one of them described it as like a
general equilibrium system where you
like had to like know all the parts and
then all of a sudden it all fit together
in a hole so if we step back what they
were doing was getting Inside the Mind
of a great thinker and understanding the
ways that all fit together and then kind
of testing their ideas against Knights
and what's fascinating is one of the
first papers that Freeman publishes in
statistics is a rebuttal of Frank Knight
he publishes a rebuttal of Frank
Knight's ideas about risk and
uncertainty and then Frank Knight he
kind of took a Black Swan argument you
know he said risk you can
calculate uncertainty you can't like
existentially philosophically you can't
get your hands around it it is the Black
Swan and Freedman publishes this
statistical paper and he says I can put
uncertainty on a graph you know and so
there's that sort of fian killing of the
father element when he comes back and
and he will you know in some ways turn
his back on Knight's approach and
knight's pessimism even while it's like
a foundation of his
thinking
fascinating is there something you could
say about the thinking process
that Milton Friedman followed like how
he
developed his ideas you mentioned
there's a strong collaborative component
but there's another story I saw
about that I think his son recalled
about the argument number system that
you mentioned which I by the way if if
you can explain that as a tangent of a
tangent that's really awesome I think
it's like number one if the other person
is right number two means um you were
right and I was wrong and the number
system evolved in some ways to be quick
and efficient but in other ways they
also really clear about it so you know
something like there's kind of like
three reasons behind it first is if you
use a number it reminds The Listener
that it's really hard to say the words I
was wrong so you're kind of calling on
their sympathy Yeah by using the number
reminding them that you're doing a hard
thing and then it's also reminding them
that you're in this family with code and
so you're you're signaling your
membership and your closeness and your
love really and so it's it's supposed to
be an easy way to disagree without like
breaking the relationship yeah so
admitting you're wrong now comes with
this warm fuzzy feeling yeah yeah and
that's really I mean that's so powerful
I think so much of the friction of human
interaction could be boiled down to just
not being able to admit that you're
wrong efficiently and Qui quickly and
regularly and just often and to be able
to do that that's really that's really
powerful yeah I think it's a really a
really neat aspect um of their family
life for sure anyway sorry that that's a
that's a fun story but like can we just
generalize to how he engag in
collaboration how he developed his ideas
is there like a thinking process so he
taught at the University of Chicago and
he tended to teach for six months and
then have six months off and he spent
the Summers um in New Hampshire or he
had a right near that border they had
two different houses and that to him was
the deep thinking time and so when he's
at Chicago he's teaching he's arguing
you know some people loved his teaching
style very much in charge very much
keeping students on their toes
confrontational others found it too much
overwhelming kind of shut them down
intellectually and they couldn't they
couldn't cope with it and so I think it
was kind of go time when he was teaching
in that case he was that was a lot of
social time interacting talking other
professors going out and giving papers
arguing with the people at Yale or
Harvard then he would go and do these
very deep Dives over the summer he would
also regularly do these trips to New
York to see Anna Schwarz so his 12E
collaborator they didn't have phone
calls were really expensive they did
have quite an extensive correspondence
but then they would do these meetings so
he would basically come in at the
beginning of the summer going to raway
stop in New York see Schwarz and then
again on the way back to Chicago so
you'd have these deep check-ins at that
point the other thing that happened is
people would come visit him in New
Hampshire and so he would have these he
had a studio separate from the house he
would go and he would work and then at
night his friends would come his friends
are all economists there's a whole like
cluster of economists they all clustered
within driving distance of the Dartmouth
Library so that they could get their
hands on books and so they would come
over and then they would argue and talk
into the night so I think he did need
that that deep focus time but it was not
like he also lived a very engaged very
embedded social life a part of which was
his
marriage uh is there something you could
say about love about marriage about
relationship that made the whole thing
work is it was vibrant and they wrote a
biography together they did I mean they
were very complimentary they were kind
of the ying and the Yang she was very
introverted somewhat suspicious of
others
skeptical and he was extremely
extroverted
optimistic high energy and they also
were at a time when it was really clear
like for broader Society these are the
roles of a man these are the roles of a
woman and they pretty much adopted those
now now um Rose fredman did some very
important economic work she's part of
the early stages of the theory of the
consumption function she didn't complete
her degree because she really knew there
wasn't if she wanted to be married and
have children in the world she lived in
there wasn't a real Pathway to also
being an
economist you know I do think that a lot
of that it's not although it it feels
very gendered like you know he's the man
out in the world and she's in private
it's interesting because her brother
Aaron director was the same way he was
very private man very shy very
introverted and he exerted this like
quiet intellectual influence on all of
his friends so I think that was just
kind of a family trait of being more
quiet preferring to be behind the scenes
it wouldn't have worked any other way
because Freeman was so out there so um
you know so extroverted and there's a
bit of a sad thing she said she said um
when I married Milton I lost half of my
conversations when David came along I
lost the other half so this a household
that was just dominated by male voices
and which she didn't have a lot of room
what was tricky for me in my research is
she didn't leave much of a trace she put
together Milton Freeman's archive and
she took herself out of it so I really
had trouble finding her actual voice in
the historical documents and she didn't
want to leave that behind so um it's
absolutely essential piece of his
success because she's the one who pushed
him to do the Newsweek column to do free
to choose and she really wrote
capitalism and freedom she took all his
random notes and she put them together
into a book and that became this kind of
testimony of his ideas but she shared
many of his ideas and she you without
when I think of fredman if you take away
schwar Anna Schwarz if you take away
Rose fredman if you take away the other
woman who collaborated with him you have
a much thinner resume than the one he
actually has yeah it's always sad and it
always makes me wonder about the the the
the private secret conversations between
partners yeah because they're you know
they're they might not show up in the
record but they probably influence the
person more than almost anything else
those quiet little
conversations
yeah if we can
switch our path to another uh great mind
of the 20th century IR
Rand we talked about some of the
similarities here about them being
Fighters for freedom and uh Fighters for
capitalism what is Iran's philosophy if
you can give a big 10,000 summary of
objectivism yeah so she called it
objectivism
she used to do this thing like I can I
can stand on one foot and say it so goes
something like uh epistemology reason
ethics selfishness politics capitalism
that was kind of how she summarized it
so what she did there's a couple things
she did with objectivism first of all
she says the key defining element of
humanity is rationalism the rational
faculty so that's what defines what a
humanity is therefore there is an
objective reality that we can access and
know with our reason that's the
objective epistemology and the one
social and economic system that lets
rationality flower and is based upon
rationality is capitalism and then
rationality only works in her view as an
individual capacity and that rationality
teaches that what you should do is
pursue your interests and so she ends up
calling that selfish
now It's tricky because selfishness has
so many strong and negative
connotations and she meant I think
something closer to like
self-actualization because she really
tried to create this idea and express
the idea that to be truly selfish did
not mean trampling on others it meant
just being motivated by your own kind of
internal measures and metrics and so in
her fiction she tries to show this by by
showing the false selfishness of some of
uh Peter keading who's an architect who
kind of steps over everybody to advance
his career and she says it's not true
selfishness because true selfishness
would recognize it's it's false to take
others work and pass it off as your own
now the other big piece of objectivism
is a very approach that's really
inspired
and and related to Friedrich nich's idea
of revaluing values or a genealogy of
morals and so she
says what's happened here is Western
culture has converged on this idea of
altruism as good being selfless and
altruistic is good and this has led us
to Communism and has led us to devalue
the individual in favor of the
collective so what we need is a new
moral code code which elevates
selfishness which elevates the
individual and which takes all the
things that we have been told are bad
and actually says their values this is
what she's trying to do with objectivism
I mean it is about as ambitious of an
intellectual project as there can be and
that's what really draws people in yet
at the same time she's flying in the
face of the way human morals and ethics
and societies have evolved and she's not
able to singleand ly recreate them the
way she wants them to be yeah I mean
she's not doing herself any favors by
like taking on the words and trying to
Rebrand them completely like writing the
virtue of selfishness it's like can we
just call it self-actualization yeah uh
there's a negative connotation to
selfishness and a positive connotation
to altruism so she sometimes it seems
takes on the hardest possible form of
argument yeah I mean she had a
a student and a you know who ended up
being very close to her Nathaniel
Brandon and he he was the Reverend
adviser and he said can you please not
use selfishness like just come up with
another word but part of her liked it
part of her wanted to provoke and
unsettle she didn't want to give that up
I mean people should listen to her her
public
talks the her her whole Aura way of
being is provocative and she's a real
powerhouse of an intellectual ual so
like she loves the challenge and that
just listening to her in itself is just
inspiring cuz you could you could see
the individualism ra radiate from her
yeah I mean that was that was one of the
things I found in in researching and
writing about her like she's an
incredibly unusual human being you know
and so that was that was like her
strength right because she's so unusual
but it was also her downfall because she
looked to herself as a model or to get
insight about humanity and she never
quite processed how different she was
from other people so just because we
talked about Milton Freedom so much can
we just return to what to you given
everything we've said is the interesting
differences about IR Rand her
ideas related to um to Milton Freeman
yeah I mean broadly we could put Milton
Freeman and Ein Rand in some sort of
category together but she
has this focus on
ethics and rationality and this desire
to be revolutionary that's much stronger
than fredman fredman wanted to overthrow
the economic consensus you didn't want
to overturn the moral basis of of
Western Society so she's also she does
something so in in one of Frank Knight's
essays he talks about the ethics of
competition and he says you basically
cannot build and ethics out of
competition because it would be
monstrous to do so because it would say
the winner of this competition is
ethically right and that would open the
door to sort of Might makes right and
this is what fredman struggles with and
he says I can't take capitalist outcomes
as ethical unto themselves I can't do it
doesn't feel right and and there's this
line where Frank Knight says no one
would ever do this and I was like oh
Frank Knight you haven't read on ran yet
you know my beer yeah you're a little
too early because that's what she does
she takes the outcomes of capitalism and
of Market competition and says these
have ethical meaning and this is where
ethical meaning inheres and it is
ethical to try to succeed and to succeed
in a capitalist Society now what she's
able to do is create a fictional World
in which people succeed in her fictional
capitalist world through ethical
behavior and so she doesn't really have
to wrestle with a capitalist World in
which people succeed through fraud and
Corruption and uh you know uh all the
other things that might go into
someone's success so she creates the
best possible take on success under
capitalism and then she holds that up as
an ideal and I think what's important is
that so few people have done that and
she comes at a time when everybody is
emphasizing the downsides of capitalism
and she says there's another way to look
at it here are the good sides of
capitalism and like you said she was
operating which I really love the
phrasing of that in the Mythic register
yeah so she was constructing these
characters these
capitalists that are like the highest
form these great heroic figures almost
romanticizing them yeah yeah you
mentioned we the living is one of the
books that you like of hers uh the most
but can we uh stay in the Mythic
register with the Fountain Head and Al
Shrugged uh what to you are some sort of
memorable inspiring
moments uh insightful moments from those
books um that may be scenes or ideas
that you take
away uh from them that are important for
people
to understand yeah so the Fountain Head
is this story of a struggling architect
Howard roor and she kind of follows his
life and his career and the message is
really it's a version of to thine own
self be true right and Ro's designs are
to Avant guard
nobody appreciates him and he just keeps
doing what he wants to do and is just
focused on his own Visions his own
genius I think that's been really
inspiring to kind of creators of all
types I think it's barely unrealistic as
a portrait of human achievement but it's
an aspirational idea I I mean one phrase
that comes to mind is there's a
character I forget which one who who is
in some sort of adversarial relationship
with Howard roor and says something to
him like well Mr RoR what do you think
of me and RoR says I don't think of you
you know and that tan was the ideal
you're not thinking of other people
you're you're an island unto yourself
you know you're focused on your own
goals your own capacities and you're not
doing it to impress other people or to
be better than other people or to
dominate other people you're doing it
because you're sort of expressing your
inner your inner soul in a way
so that has been very captivating to so
many and the Fountain Head is one of
those books we talked about that causes
you know people read it and they make
changes in their life or they feel
called to their their higher self and I
think there's also the scene or or with
the dean of architecture school that's
speaking to what you're saying I think
to me is inspiring so this is the dean
of architecture that expels oror and it
brings him into a meeting thinking oror
will plead for a second chance and the
dean says that Ro's work is contrary to
every principle we have tried to teach
you contrary to all established
precedents and traditions of art do you
mean to tell me that you're thinking
seriously of building that way when and
if you are an architect and then in a
gangster-like way roor says yes and then
Dean asks my dear fellow who will let
you and roor replies that's not the
point the point is who will stop
me yes I mean you know Ran's coming from
communist Russia but it has a bit of the
don't mess with with Texas flavor you
know I might say that really resonates
with this idea of anyone who's felt like
they're you know fighting the powers
that be um yeah it's interesting I I
thought you might uh be going to the
quote where he says something like I I
inherit no tradition you know I stand at
the beginning of one and I I really
think Ran's thinking about herself you
know when she says that she that she
inherits nothing she stands at the start
but you know the Fountain Head comes out
in in the middle of World War II and
it's it's not expect Rand is an unknown
writer this is kind of a strange book
it's you know classic story it's turned
down by 12 Publishers before one takes a
chance on it and Rand really loved this
story the editor who read it said this
book is great and his boss said no and
he said if you don't take this book I'm
quitting you know and so she you know
she she idolized him for doing that so
they print it and it becomes the best
seller just through word of mouth so
it's not advertised doesn't it gets one
good book review but it it people tell
each other how much they like this book
and it keeps Printing and selling out
printings it's made into a movie and so
it lands in this time when Americans are
engaged in this great Collective
Endeavor of World War II they're making
all kinds of sacrifices for the
collective and I think paradoxically as
they do that they're drawn to this
vision of someone who doesn't have to
compromise at all you know who is
leading their life exactly as they want
to you know meanwhile they might be
sleeping on an ocean liner because
they've been drafted to fight in this
war and they're reading the Fountain
Head and they're feeling better about
the themselves and so it's also really
interesting The Fountain Head is hugely
popular in India which is fascinating
and you know talk to people about this
and they basically say this book comes
like a breath of fresh air into a very
traditional and conformist culture and
people just latch on to it and they love
it you know and it gives them that
feeling of freedom and possibility that
they're hoping for yeah I mean it really
is a book Alice rug can be a bit of that
too but it's more more of the philosophy
objectivism the details and the Nuance
of that seeps into outla Shrugged the
The Fountain Head is very much like a
thing that makes you change the path of
your life yeah and that I mean that's
beautiful to see that books can have
that power and you know Rand knew that
she was doing that and she she knew what
she was doing you know she this wasn't
an accident and people say oh she's a
bad writer oh her characters are so
heavy-handed you know she started as a
screenwriter she started as a someone
who analyzed films for movie studios she
knew exactly how to manipulate plot and
character and drama and she also knew
that she was writing you know people say
oh Rand is for you know adolescence
adoles teenagers love Rand and that's
kind of who she was writing for and she
said you know I'm writing for people as
they start out on their life and they're
thinking about who they want to be um so
she's not
writing you know for the weary middle
age she's writing for the young who are
looking for inspiration you know people
say that to me sometimes about certain
books like
Rand but also about The Alchemist I know
a lot of people For Whom The Alchemist
and they're adults and they brilliant
people The Alchemist changed their life
and the same can be said about the
Fountain Head yeah
I and I sometimes get criticized for
using words that are too
simple I think simple words can uh can
have power and the cliche thing
sometimes needs to be said as sometimes
if effectively needs to be said in an
over-the-top way in the uh in the Mythic
register because that's the thing that
resonates with us yeah cuz we we are
like Heroes of Our Own Story and we need
to hear that message sometimes to take
the Bold step to take the risk to take
the leap yeah and I mean the other thing
she she knew she was doing kind of
propaganda in a way she was like I'm
doing Pro capitalist propaganda she has
a degree from the University of
Leningrad you know she's raised up in
Soviet Russ
she said we need to present the case for
the other side in the same way and
that's what she did why do you think
she's so divisive people either love her
or hate her I mean I think it's because
of that Purity that I'm willing to say
sort of you get what you deserve and
that kind of lack of
Charity and and part of that in her work
is because she creates this fictional
world where she can set everything up
just so and so you don't have have um
contingency or accident or bad luck or
you don't really have a lot of children
you don't have handicapped you know you
you just have this idealized world and I
think it's really infuriating for people
who feel that so inaccurate how can you
be deriving a social theory and
philosophy around this and how can you
be missing what seems to many people
she's missing the kind of ethical
instinct or the altruistic or charitable
Instinct and so they just become enraged
at that and they don't they don't want
to see anyone go that far and they're
outraged that someone went that far you
know that did the thing that Frank
Knight said no one would do um yeah it's
just it it's very unsettling would you
say that's her main blind spot the main
flaw of objectivism is just how black
and white it Paints the world or if not
mean what what what would you say are
the flaws of
objectivism so I mean the big flaw is
that it's justified through a fictional
world you know it's not
justified through reference to the real
world you know it's it's not empirical
in in in a way it's not um and and Rand
herself would say this she's not writing
about things how they are but how they
should be and
so that
idealism just really
undermines it as a mechanism to
understand where we're actually living
and that is a big contrast with Milton
Freeman were who would focus on how
things are versus how things should be
and then I think it's the problem of
elevating rationality over any other
mode of insight or thinking and so what
happens in Ran's life and I describe
this in some detail in the book is she
essentially creates a cult of reason
around her
and people who are drawn into this cult
it's called the collective it's a group
of young people in New York City who are
drawn to her work
and she's already famous but she's
writing Atlas Shrug and so she's
sharing drafts of Atlas Shrug as she
goes along and one of the members of the
collective to bring all of this together
is Alan Greenspan who later be head of
the Federal Reserve and he's incredibly
taken with her he's one of these people
who says I was a narrow technical
thinker I never thought about ethics or
politics or anything bigger until I met
a Randon she really opened my mind so
he's part of this Titanic group but over
time in this Titanic group they think
themselves we are all individualists
we're dedicated to individualism and
capitalism we're different than
everybody else over time they all come
to share IR Ran's views and opinions on
everything from music to Art to clothes
you know there's she gets a dining room
table and a bunch of them get the same
dining room table um and it becomes
incredibly conformist because they've
all believe they're acting rationally
and they believe that to act rationally
is to agree with Ein Rand and they
believe there's no other way to make
decisions than rationality and so to
disagree with her is to be irrational
they don't want to be irrational so
people get really caught up in this very
damaging cult-like circle around her
Plus for for a cult of reason they get
awfully emotional when there's any
disagreement
with I mean it's it's it's kind of
hilarious it's absurd but it's
um I mean it's also beautiful to watch
this this singular figure we've talked
about several singular figures a like
Frank right that shakes up the world
with her ideas yeah and of course it
would form a cult and of course that
cult would be full of contradictions and
hypocrisies yeah I mean it's amazing
there's um so Murray rothbard is a
famous Anarchist falls into the irran
cult and then he disagrees and it
there's some type of show trial where he
told he's wrong about everything and
then he has a little sort of pseudo Cult
of his own and two of his cult members
switch over to IR Rand and then one of
them to show the G to gesture their
breaking of their relationship mails him
a dollar bill that's been torn in half I
mean this is high theatrics
[Laughter]
right okay sticking on the drama in the
theatrics uh who was Nathaniel Brandon
oh yes can you uh take me through the
art of ir Ran's relationship with
Nathaniel Brandon to their dramatic
falling out in 1968 yes so so after the
Fountain Head um The Fountain Head is
auction to be a is sold to be a film so
irran moves to Hollywood where she's
going to help in the writing of the film
she wants a lot of creative control and
she's also still working in
screenwriting and things like this and
so she gets a letter from a uh there's a
Canadian student who's written to her
several times and then he writes again
and he says I'm at UCLA and she's like
young man you're so full of error why
don't you come visit me and and I'll
straighten you out so he comes and they
have this real meeting of the minds they
talk all night he comes again he brings
his girlfriend she loves him and they
start this very intense relationship of
spending every weekend at her house
basically staying up all night talking
about ideas he becomes completely
converted to the objectivist worldview
um ran begins counseling him and his
girlfriend about their relationship you
know very intense thing then eventually
they graduate from college and they both
enroll in a graduate program in Columbia
and they leave and after they've left
irand is just
bed and within a few months she packs up
her home and she moves to New York here
I am I like New York better and so that
becomes the seedbed of the collective
and the Brandon they get married they
change their name to Brandon they've
never publicly spoken on this but many
people have pointed out it has the word
Rand and in the name so it's some type
of acknowledgement of how important she
is to them and time goes on and romantic
feelings develop between Ein Rand and
Nathaniel Brandon who's some 20 years or
Junior and they discuss them and they
realize that rationality has led them to
the conclusion that they should be
lovers right right they've rationally
decided this but because they're
rational they um need the consent or at
least to inform their Partners they're
both married they're both married so
they call a meeting and
they obtain the consent or maybe simply
inform the others of the rationality of
the choice and then they say but this is
only going to be an intellectual
relationship but we'd like a few hours
alone each week and we don't want to be
deceptive so we want you to know and
improve of this so the spouse is bought
into rationality know and
approve one thing leads to another it
becomes a full romantic and sexual
relationship and although it's open with
in these four people it is not open more
broadly and so in all these meetings of
the collective got Allan Greenspan all
these other people coming up you know
drinking coffee all night talking
talking they all know that Nathaniel
Brandon is objectivist number one they
don't know that there's a romantic and
sexual relationship happening it's kept
a secret and then when Atlas Shrug comes
out it's panned by reviewers people
absolutely hate this book and Rand is
not Howard roor she falls into a deep
depression because her Masterpiece has
been rejected and so then the Romantic
relationship ends but the close personal
relationship continues and then over
time Brandon who's still married to his
wife begins an affair with another young
woman and at this point he has started
the Nathaniel Brandon Institute to teach
objectivism and he's making good money
he's becoming quite famous she supported
the Institute she supported it and and
at first it was to help her in her
depression he said the world needs to
recognize your Genius they missed Atlas
Shrugged but I'm going to teach them I
will bring the message and it's very
successful it becomes its own business
it has a newsletter it's a whole world
so so that small cult around irand
expands to this whole social network and
it's very much a piece with this
burgeoning conservative movement
objectivists are involved in criticizing
the draft and you know there's kind of a
Libertarian objectivist world going on
all of this is happening in the meantime
the Brandon has found a new partner and
he does but he doesn't tell on ran this
because he knows she'll be upset and so
it goes on for
years
and and and hran knows something is
going on but she can't quite figure it
out and it finally Barbara Brandon says
to Nathaniel Brandon you know you have
to tell her this has just G gone on too
long so she finds out and the whole
thing blows up and she Exiles him and
she breaks off contact with him and
nobody's ever told what happens it's
called The Objective Schism you know
objectivism breaks into two because some
people
say how could irran do anything wrong
and other people say what is this letter
all about and what did Nathaniel Brandon
do and I'm not just going to take her
word for it I need more information and
then a bunch of people you read all the
accounts of this a bunch of people are
like okay they were having an affair and
a bunch of other people are like no that
couldn't possibly be happening you know
and so
the whole thing breaks up but but what I
you know argue in my book is actually
this is to the benefit of rand's ideas
because Rand herself was so controlling
over her ideas and now that she steps
back from a public role you know
objectivism flows into the student
libertarian movement some objectivists
become conservatives it just kind of
spreads out more generally and you don't
have to drink the Kool-Aid you don't
have to take the official course
Nathaniel Brandon goes on to be part of
the self-esteem movement you know sort
of human potential movement
California and Ein ran lives you know
another another 10 years or so but she
doesn't do major work after that so
since since we were talking about some
of
the uh although rationalized some
strange sexual Partnerships that they're
engaged in uh I have to ask about the
Fountain Head and the the quote unquote
rape scene in the F head uh was she
intending to add that there to be
controversial how are we supposed to
read into it uh is it a glimpse into
Iran
sexuality and maybe broadly we can say
what was her view on this on sexuality
on sex on power dynamics and
relationships yeah I mean there's also
an objectivist theory of sexuality that
probably the least convincing of all the
parts of objectivism and it goes
something like your sexual desires
express your highest
values and they are related in some ways
to your rationality right which is also
related to your highest value so so for
her that
explained her attraction to Nathaniel
Brandon and Nathaniel bra Brandon's
attraction to her was a function of
their highest values and in fact Brandon
emed this so deeply that the fact that
he was later drawn sexually to a woman
who was not particularly
accomplished but was beautiful caused
him deep anguish and guilt for me non
objectivist so this is the objectivist
theory then the gender politics are just
crazy and we have to kind of back up and
think okay so who is an Rand she's born
in Lisa rosenb in Russia she is someone
who stands out from the crowd from the
beginning she never really fits in she's
not conventionally Beautiful by any
stretch of the imagination she struggles
with her weight and she doesn't consider
herself to have a beautiful face she's
very independent she meets none of the
metrics of traditional femininity at all
she finds love with a man who is very
handsome but very
passive yet she writes in all her
fiction about strong manly Heroes so
this seems to be like a projection the
man she's actually with is not a strong
manly hero the heroes she writes about
she probably wouldn't be able to be in
the same room with them for more than
one minute before they got in a raging
argument right and then then she
develops this theory about women and men
in that a woman a woman should worship
her man and a woman finds her true
expression in worshiping the man she's
with so again this is not at all how
einan lives her life this is like this I
would say a compensatory theory for her
lack of ability to conform to the gender
Norms of her day she then
articulates them in a very strong and
almost distorted and exaggerated way to
compensate for the fact that she does
and actually meet them and can't
actually enact
them the rape scene to some degree
embodies that idea that the to some
degree that the woman should worship the
man I tend to read it more in terms of
literary genre so Rand is a
screenwriter you know a consumer of
movies and that rape scene is like
paradigmatic for the romance genre in
other words he's like pulpy romance
novels the hero rapes the heroine that
and then they fall in love that's just
the Trope of how it works so it's crazy
when you read it but if you were reading
a bunch of novels in this genre you
would find this is like very standard
and so but that is a huge part of his
appeal at the time there's this feminist
who hates rant Susan brownmiller and she
wants to write an angry denunciation of
the rape scene so she goes to get the
Fountain Head and she's wondering how is
she ever going to find scene in this you
know 800 page book it's a library copy
because she doesn't want to buy it and
it just Falls open to the rape scene
because everybody's gone and read it
because it's very racy and explicit for
that time so I'm I'm almost positive she
also knew that like if I put in this
kind of taboo breaking sex scene that's
also going to probably be why people
tell their friends about it so I just I
think it's a mess I think all of the
gender and sexuality stuff is that she
states
is just a total mess I think uh it also
reminds me of of another guy related uh
freeder n who had very strong opinions
on women and wrote about what women's
role in society should be and different
Dy power dynamics and relationships and
all that kind of stuff when he himself
really had trouble getting laid Yeah and
so you have to you have to sort of um
always maybe chuckle or take with a
grain of salt the analysis of power
dynamics in relationship from these
figures which which failed in in many
regards in their own private
life um you mentioned feminist would you
consider irand a feminist I mean she's
almost an
anti-feminist um because she then goes
on and um someone writes her a letter
about like um should there be a female
president or something this is like the
beginning of feminism and she says um no
um no woman should ever be president
because if she's president she wouldn't
be able to look up to any man because
she would be so powerful and therefore
she would be like corrupt and like
rotten in the soul and like unfit to be
a leader and it just it it just makes no
sense um but that said she's a woman and
she's one of the most powerful
intellects in the 20th century yeah and
so it's the contradictions I mean nich
is full full contradictions of this
sort that
the the very fact that she's one of the
most powerful minds in history to me
means that she is a feminist in her in
the spirit she embodies right in what
she represents well I mean she lived the
ideals of individualism in her life and
set aside gender Norms in her own life
but she did not see herself as part of
any she did not see herself as doing
this for the benefit of other women or
to change society's views about women
there was no Collective Essence to it so
if if feminism has some sort of
collective aspect to it or at least some
identification one needs to identify
with a broader category of women and
feel they're acting in behalf of that
she's definitely not doing that and she
did you know she
was fair to women in her life promoted
them in her life but did not I mean she
was very negative about feminism and
then because like they dress terribly
you know and then the other thing it's
really interesting she had there's all
these kind of homoerotic themes in her
writing and for that reason many gay men
were drawn to her writing and then she
would say like homosexuals are dirty
terrible people you know she would
denounce people for being homosexual so
there's a whole actual literature of
like gay men wrestling with Rand and how
she like what she says about gay people
so um yeah it's it's hard to make sense
of and I just I just think of the enous
pressures if I want to be charitable I
just think of the enormous pressures she
was under in the culture she was raised
in the expectations that were placed
upon her and her just utter inability to
meet any of them and it came out in this
very tortured set of ideals that she
tried to
promote um and this kind of lack of
ability to introspect in herself and to
was probably too painful to introspect
and to think about that so she just
tried to rationalize is her way through
it and it came out in these very strange
theories why do you think that IR Rand
is maybe you can correct me but as far
as I can see never mentioned in the list
of great thinkers in history or even the
great thinkers of the 20th century or
even the great female thinkers of the
20th century so you have somebody like
Simone de
bravar uh Hana
Ren I almost never see her in the list
if you Google those silly list top
whatever
top thinkers of the 20th century she's
not mentioned why is that you know a lot
of people just deeply dislike ran they
deeply dislike her ideas they don't
think they're profound because their
disconnection from other ideas and other
understandings of human society I think
I think where you could look at them and
say these are these ideas are very
provocative and they're very deep
because she's not taking anything for
granted and she's flipping everything
around and forcing you to really think
to a lot of other readers to her critics
they just look absurd like how could you
even make these
contentions um and I think that because
she she's not without precedence and
she's not without followers but she
doesn't knit herself into an
intellectual
Community um the way that these other
thinkers do very naturally that that can
you can see who they influence you can
see who they're in dialogue with you
know I think my book was one of the
first to really take Rand and say she's
a figure in American history here's who
she's connected to here's who she's
influenced and I got a lot of push back
for that you know I think now people are
more open to it but I think the people
who compile these
lists really dislike her work and they
think it shallow
because they find her fiction overdrawn
they find her work in the Mythic
register simple and she's also a grand
systematic thinker in an age that's over
systems you know she's almost she's
creating an inverse Marxism right Marx
was writing in 1848 you know he's not a
thinker of the mid 20th century so um I
think that's part of it the lack of a
legacy and the dislike of what she had
to say and the feeling that she's too
detached her insights are not insights
because they're too idealized rather
than being rooted in a theory of human
nature that people find plausible
you study and write about history of
ideas in the United States over the past
100 years 100 plus
years well how do you think ideas evolve
and gain power over the populace over
our government over culture just looking
at evolution of ideas as they dance and
challenge each other
and play in public
discourse um what do you think is the
mechanism by which they take hold old
and have influence yeah I mean there's a
couple different ways I think it happens
I really am interested in the
relationship between the Thinker and
then the reader and The Interpreter of
the ideas and then the conditions on the
ground that make that idea resonate or
not
resonate um and so I think I think a lot
so so as an intellectual historian I'm
studying ideas always putting them in
their historical context like what is
happening that is making these things
resonate that is making them people seek
them out um so for Ran's case she has
this credibility because of her
experience of Communism which is one of
these defining moments of the time and
then I think the idea comes out in a
sort of pure form and then other people
rework it and reshape it as they read it
and I'm really interested in how people
form communities around these ideas so a
bunch of people started calling
themselves objectivists and getting
together to read Ran's work that was
spontaneous and ground up and wasn't
supported by any money nobody planned it
it just happened fredman's a different
case in that he joins an established
tradition of thought that's been
institutionalized in universities so
people are signing up and paying money
and getting credential to learn these
ideas so to my mind these are two
different ways but really emblematic
ways of how ideas spread so Rand I think
of as more bottom up like people
encounter the idea in a book they're
kind of Blown Away by it or they embibe
it without even realizing they're eming
it and then they're like well maybe I
don't like Franklin Roosevelt so much or
maybe I'll look SE another time at Berry
Goldwater and then whereas fredman you
get the idea more top down I know I'm
getting the idea I know I'm being
positioned within a sort of elite
discourse of economics and so I think
they kind of go top down and bottom up
and then they hit the events right
fredman's ideas would have gone anywhere
without that episode of stagflation that
really made people think they proved out
and I think rand's idea's really caught
fire in Cold War America that's looking
for a statement of like what does it
mean to be an individual what does it
mean to live in this Mass Society
because it's also a time of great social
Conformity and where people are suddenly
you know they're working for large
corporations um they've been served in a
large military you know they're the
United States is stepping out onto the
world stage everything is bigger what
does it mean to be an individual in that
world and that's where rand's ideas
catch fire so I think a lot about about
that about how they trickle through
different levels of society and then how
ideas collide with experience I think is
critical what do you think about like
when they actually take powering
government so I think about ideas like
Marxism and how that evolves into the
bulvik revolution how how that like
takes hold in its implementations or you
can think about Nazism and with Hitler
where it goes from a small number of
people that get real excited about a
thing and then like somehow just becomes
viral and takes hold in power and then
that has its
consequences when I think
about the sort
of historical path of Communism and the
kind of Logics and dynamics of Communism
I mean in in many ways it has some
Echoes with Rand in that you know the
the ideology and its p form is is almost
it's a it's a rationalist ideology of
some ways it's an analysis of history
and how things are supposed to be and I
think you mentioned Hana aren I think
she has one of the most kind of
penetrating analyses of of Communism
which she really puts in the category of
like it's it's a it's a logical
ideology logic leads inexorably to its
conclusions and then experience crops up
and experience is different and what is
what is a a sort of cult of rationality
do when it hits experience well it tries
to bend experience to its will and that
I think is really the story of Communism
writ
large um so the question though is why
you know why does it catch fire why does
it draw people into political allegiance
I think in the case of Communism it's
this dream of a more ethical world you
know dream of equality dream of the
powerless rising up against the powerful
I mean that's very um that's drawn in so
many and then you had the whole addition
of leninism which gave a kind of
international cast to that and helped
people think about what are the
relations between poorer and richer
countries and what can we expect out of
them and what might happen gave them
sort of a framework for thinking about
that in a time when those the world was
becoming more interconnected and those
differences were becoming more obvious
you know fascism to me is
unleashing
more something Primal something sort of
dark and Primal within people and and
it's more a permission structure to
indulge in that that is normally not
there those impulses are normally
channeled or held down and it seems that
when the fascist regimes come into power
they give people permission to let those
forces out I think on
communism going back to that uh lecture
that IR R
gave I think uh what Rings true to me a
little bit is that uh it what fuels it
is a kind of uh maybe not resentment
Envy
towards uh towards the people that have
the have kns versus the halves and
there's some degree to which Nazism has
the same of Envy towards some group
resentment towards some group so it's
given the environment of Hard Times Hard
Economic Times combined with the more
Primal just
Envy of not having and seeing somebody
who has it and just constructing a
narrative around that that can become a
real
viral idea yeah it seems like communism
is more animated by this idea of
Injustice you know the world is unjust
it should be different and fascism seems
like the process of scapegoating right
we've identified the source of the
problem and it's this group and they
need to be punished for what they've
done to the rest of us there is a primal
thing is going back to literature in
1984 two minutes of hate get everybody
real like excited about like hating a
thing and there's something Primal about
us humans where you once you're in that
state of hate
anyone can direct that hate towards
anything yeah towards
uh yeah towards any group towards any
idea towards anything just because we're
we could get caught up in the Massy Thea
of the the hatred it's a dangerous thing
yeah you uh you floated idea I forget
where uh of pivoting for your next book
uh towards maybe
writing about
postmodernism uh which is a set of ideas
almost the opposite of Iran's philosophy
so can you uh maybe explain your C
curiosity about first of all spaces of
ideas but maybe uh
postmodernism yeah I mean I think in the
broadest sense what I'm interested in
kind of two Dimensions that guide me and
doing intellectual history one is what I
talked about like how does an idea go
from a book an elite
space out to more popular Dimensions
like how does that happen What happens
to the idea along the way how is it
distorted or changed and the other is
just search for meaning and of a
post-christian era or a secular era like
what are what are people coming up with
and I think to replace that void in
their religious or spiritual lives I
think both Rand and fredman offered
these sort of alternatives right
objectivism quasi rationalist
religion people take economics as a as a
theory of the world that almost you can
almost believe in it right it can almost
take that place and in both cases how do
those ideas travel when I think about
postmodernism you know it first struck
me you know these if you read the
original postmodern thinkers it's really
tough goinging I mean I make my students
do it and they suffer I think they see
it's worthwhile but it's no fun to read
daah you know but somehow it's trickled
down into how do we go from like Dairy
da to Tumblr and I sort of realized like
oh this has happened with postmodernism
it's followed the same path you know
that say from Milton fredman's economic
theory to you know free to choose on
YouTube we've had a similar path you
know high French Theory down to Tumblr
and you know I you know sexually
identify as an attack helicopter or
whatever it may be you know and so that
was really interesting and then I also
thought you know well at the same time
um this is clearly a structure of
meaning and I actually think it's
followed the same path of objectivism
which is turning into its opposite like
distilled down and then turning into its
opposite so if objectivism was a group
of people who considered themselves
individualists who ended up deeply
conforming to the dictates of a
charismatic leader you know
postmodernism started about disrupting
binaries that was we're going to be
fluid we're going to go beyond the
Border going to disrupt the binary and
it's devolved in its popular forms to
the reinscribing of many different
binaries oppressor and oppressed you
know has become this like paradigmatic
set of glasses you put on to understand
the world so I think this the Dynamics
are very very similar so I think it's
something in the traffic of the idea
from its pure form to its popular form
and then how gets it gets politicized or
mobilized in different ways and behind
it all I think is this human longing for
meaning and the inadequacy of the
traditional ways that need was met at
this point in time by the way that uh
going from Pure form to popular form I
remember this might be before the
internet but when I was in college
reading dared Fuko and like not knowing
context at all it interesting all right
this is like I'm able to read pure
encapsulations of an idea and just kind
of like all right well that person
believes that and you just kind of hold
it but then you realize if if you
actually take the pure form of that idea
and then it creates a community around
it you realize like what that actually
becomes yeah and you're like oh yeah no
I
don't that's not although I do um
consider myself sexually an attack
helicopter that's it identify sexually
yes beautiful okay
um your process of
researching for uh let's say the
biographies of mil freedan IR Rand seems
like an insane amount of work yeah you
did incredible work there going to the
original sources can you maybe speak to
that what uh is required to
persevere and to go to go for so many
years to go so deep to the sources so I
mean I I I go to the archive that's
that's where I feel like I'm I feel like
I'm communing with the dead in some ways
you know I'm seeing what they what they
saw in some ways reading what they felt
and I you know I tell my my doctoral
students it's got to be something that
gets you out of bed in the morning
because there comes a point in your
doctoral career when nobody's there's
nowhere to go there's nowhere to be you
got to be getting up because you're
interested in what you want to study and
so with Rand it was this real sense of
Discovery like I am discovering I want
to know about this woman I want to know
where she fits and the only way to find
out is to do the research you know and
so um yeah I I just I like to go deep
it's it's really interesting to me um
and I should say in both of these cases
I've done it in an Institutional
structure I don't know that I would do
it independently so the first was a
graduate program in history was at UC
Berkeley and so I had coursework and
then I had structures and I did have
people to check in with and read but I
had a great deal of latitude I'm very
grateful for people are like you wrote a
dissertation on IR ran at Berkeley I'm
like yeah hell I did you know Berkeley's
like it's a great place and it at the I
was there there was absolute room for
free inquiry oh can you just like Linger
on that so when you said that you're
doing that doing a desertation on IR
Rand was there did people get upset no I
did have a you know a friendly critic
who who took it upon himself to throw at
me everything he thought the outside
world would throw at me I think maybe
five or 10 years earlier it wouldn't
have been possible and it but the most
important thing I had to
the person I really had to convince this
was worth doing was myself you know
because I knew it was uncon an
unconventional choice for the field and
for a dissertation but once I convinced
myself I just said well we're I'm going
to do this and see and because it was
unconventional it it ended up standing
out and and but it really was at time
there was a was I was started it during
Second Bush Administration second George
W bush second term people were
interested in just conservatism in
general and felt no matter where they
stood on the political Spectrum felt
like objectively we don't know enough
about this and this is a problem and so
they were open to learning more so I
really kind of caught that caught that
wave in scholarship and caught that wave
in American culture where people wanted
to know more yeah we should probably say
that I
mean Iran is at the very least as you've
mentioned a kind of gateway to
conservatism yes I called her the
gateway drug and that people start with
Rand they're taken by her you know in
some way she takes the worldview of
Milton fredman in terms of what
capitalism can accomplish economically
and then she puts it in this mythopoetic
register and she fictionalizes it so
once people have absorbed that they want
more you know they go on to learning
more of the ideas behind that Vision or
they have become True Believers they've
converted and so then they head off to
work for a politician to work for a
think tank to work for a party it's
absolute traffic now not everyone
there's plenty of people who read on
Rand who don't take the politics in it's
a nice story it's interesting um just an
episode in their life but for others
it's really foundational really really
changes them so those were the people I
wanted to track very deliberately I
wasn't trying to do in the round
everything about irand I was like irand
and the American right you know goddess
of the market Ein Rand and the American
right is a title so where did they where
did they take her those who took her in
this political Direction what difference
did she make if we uh return to like the
actual your process yeah so you're
showing up you're reading
sources and you're like is it kind of
like the process of discovery you're
just kind of like taking it all in and
seeing
what uh unifying ideas emerge or maybe
Mo special moments that illustrate an
idea emerge yeah I mean I know with the
biography of a person I am already given
a start and an end date and a rough
Narrative of what happens so I have a
kind of structure and then with Rand
both with r and fredman I started by
reading their major books before I
really read anything about them because
I wanted my own experience of the
material to be fresh and I had read some
irran but not a lot similarly I had read
some fredman but not a lot so I had
first is like let me read the major
stuff get oriented and then just dive
into the archive and see what's there um
who are they talking to what's going on
um in Ran's case you know I I was
interested in in her in the United
States not her in Russia I didn't have
the language skills to do that so I
start her in the United States and I
start when she publishes her first book
and she starts getting letters and who
is she writing to who's writing to her
and then I start to uncover this world
of kind of nent conservatism and I'm
kind of putting that together and once I
have enough I say well that's a chapter
I cover that chapter and then there's
going to be you know the book has come
out and so now I need to start a
different chapter what's her life like
after the book has been published you
know and then I look for that but I'm
really although I have this very high
level structure it's coming out of the
archive the material I'm finding and if
I'm not finding the material there I
won't cover it in great detail or if
I've decided it's outside my ambot I'm
not going to go into great depth on it
and you're trying to understand their
relationships it's so fascinating like
reconstruct in a dark room trying to
reconstruct shine a light on
relationships through Reading letters
it's interesting yeah yeah I mean
correspondence is really really helpful
drafts correspondence and you know
someone this famous they have oral
histories other people write about them
so you're reading all these different
things and kind of triangulating and
trying to sort of put them together and
then think about how do I present this
in a compelling story and what do I need
to explain and then also for me what was
really helpful was is that because I
teach and I am explaining the kind of
broad sweep of 20th century history so
you know I know that Ran's involved in a
a labor at Warner Brothers but through
my teaching I realized oh yes this is a
moment of Labor strikes across the
country and so then that really changes
the origin story of Atlas shrub because
she's looking at Labor actions and she
originally thinking of the book as being
called the strike so she's really
responding in real time and being
inspired by what's happening you know in
the mid 1940s in the United States so
then I can kind of take that and run
with that and figure out where to go so
you're super passionate about teaching
uh you mentioned Milton Freeman had a
very
uh uh interesting way of teaching uh so
what what's your how do you think of
teaching teaching history teaching
history of ideas teaching Bright Young
Minds about the past yeah I mean it's
great it's really inspiring the the ways
the old school kind of dominating way in
which Freedman taught would not fly in
today's University uh wouldn't wouldn't
be permitted and also the students
wouldn't respond to it you know so um I
try to share my enthusiasm I think
that's like almost the number one thing
I bring is my enthusiasm like look how
neat and interesting these ideas are I
try to keep my own views out pretty much
I try to give the fairest possible
rendition I can of each thinker if I if
I find someone really disturbing I might
sidebar at the end of the lecture and
say this kind of you know I find this
unsettling and this you know tells me
something about myself but most of the
time I'm bringing people into the like
the biography of a great thinker the
context of them and then we in the
lecture we'll literally read the work
together and we'll talk about it and
I'll ask the students what are you
finding here what's jumping out at you
um kind of breaking down the language
and and really teaching them how to do
deep reading so I feel like that is my
contribution right now we're having
trouble reading collectively we're
having trouble paying attention
collectively and I'm trying to cultivate
their skills to doing that and showing
them how I do it and also modeling like
this is how I would read a text this is
what jumps out to me when I look at you
know Thomas or something like this
um and just show them that I studying a
history of ideas is really fun I feel
incredibly privileged to do it you know
and the other thing is I think this is
the time for for students in college
figuring out who they are their minds
are developing and growing they can
really handle complicated hard ideas
they don't always have the context
behind them so I need to give them the
hard ideas and then show them this is
kind of the context of what's happening
in the world but really I'm just I'm
showing them the landscape I don't have
time to go deep we have a 10we quarter
you know I giving them a fly over and
then I want them to know how to go deep
and know where they want to go deep do
the thing that Milton Freeman did which
is in parallel yes do their own parallel
curriculum exactly exactly what advice
would you give in terms of reading about
ideas you agree with than reading ideas
you disagree with I mean even though I
think the passion is important for the
teaching of the ideas like dispassion is
more important for the reading and
understanding of them um so a lot of
people have said to me like I could
never write about Ein ran like she makes
me so angry you know and i' I've never
become I don't get angry reading her
like I'm I'm like oh there you go again
you know or like well that's going to
cause trouble lady you know and so um I
guess I'm approaching it with a sort of
Charity but also with a I'm not I don't
have huge expectations I'm not expecting
to have the light shine on me I'm not
expecting to agree I'm I'm like I can be
very clinical about it so that's what's
worked for me it might not work for
others but and then I just try to find
the humor in it you know like how how
funny is it like these different aspects
of them you know like I when teaching my
students about Oliver Wendell Holmes
like his his dad wrote a poem about him
he called him the astronaut about how he
came from outer space he seemed like he
came from outer space I'm like this is
his dad's view of his son like that's
how weird of a guy he was you know and
so I try to like find that keep alert
for those funny kind of human touches
that like these are ultimately just
people you know people with ideas that
they spent enough time polishing up and
developing that we still want to read
about them a hundred years later what
about the dramatic formulation of that
same question do you think there's some
ideas that are good and some of that are
evil do you think we can draw such lines
or is it more complicated like the old
soulen line between good and evil that
runs to the heart of every person I mean
I uh philosophically agree with souls
and nen for sure I do think some ideas
pull on the good side and some ideas
pull on the bad side like absolutely and
I think that's probably that's probably
why people dislike ran so much as they
feel like she's giving license to the
bad side and she's saying it's okay to
be selfish and it's okay you know they
feel like she's unloosing the dark
Forces
um and you know in some cases that may
be true but I also she's also un un
loosing some of the light forces in
terms of reflecting on yourself and
trying to trying to be true but
definitely there are ideas that are
dangerous to play with and there are
ideas that I think give license to the
darker sides of human nature um but I
think you can see that in the historical
record so I think that it's possible to
show that and obviously there's some
places you know like Germany they're try
they think the ideas are so dangerous
they can't be allowed to circulate and
in some context that may absolutely be
true and
then still even that we should take with
a grain of salt because perhaps
censorship of an idea is more dangerous
than the idea so all of that that's the
beautiful thing about us humans we are
always at T at tension trying to figure
out what ideas are the ones that are
going to help Humanity flourish uh
pothead question
yeah do humans have ideas or do ideas
have us so where do ideas come from you
have Milton Freeman sitting there after
rugger is trying to figure out what he
can do about the Great
Depression um what like where do you
ever think about this like I I sometimes
think that ideas are aliens are actually
ideas they're just kind of like travel
through human brains and like uh
Captivate Us and we get all real excited
uh like with a monolith in 2001 Space
Odyssey a monolith lands and everybody
gets excited and somehow this idea just
gets everybody to be on the same page
and it reverberates through the
community and then that results in an
implementation of some action that
results in US figuring out that that
idea was actually bad and we learn new
ideas and but that it feels like the
idea is running the show yeah I mean I
think in a lot of is I think it's true
you know there Kan has this famous quote
like you know most men are slaves of
some defunct Economist you
know so um that's funny so I do think
that we like it's really hard to have an
original thought you know we are social
creatures we encounter the same
situations again and again um and so
it's really hard you're born into these
traditions of thinking and being and
knowing and most people are never going
to question them and most people are
never going to become aware of them so
again that's some of the work of what I
do as an intellectual historian is like
let's become aware let's realize that
you're carrying a map that's orienting
you to the world in a certain way right
and so um I think you have to work
really really hard to have an original
idea and even then it's not a completely
original idea it's a reworking and a
reassembling of ideas others have had so
I definitely think it's possible to
create autonomy in the realm of ideas
and to be an autonomous consumer of
ideas but I think on balance most people
are not and that's fine they want to
have experiences they want to do other
things with their life you know well
Jennifer thank you so much for this
journey through ideas today and thank
you so much for your incredible work uh
it was really fun and fascinating uh to
talk with you today thank you thank you
thank you for listening to this
conversation with Jennifer Burns and now
let me try to reflect on and articulate
some things I've been thinking about if
you would like to submit questions or
topics that I can comment on in this way
here at the end of episodes go to Lex
freeman.com
or contact me for whatever other reason
at Lex freeman.com
contact please allow me to say a few
words about my interview with the
president of Ukraine Vladimir zalinski
now that a few days have passed and I've
had the chance to think about the
conversation itself the response future
upcoming conversations and what it all
means for the war in Ukraine for Global
geopolitics and for us humans in general
I've gotten a lot of heartfelt positive
words from all sides including at least
so far literally everybody who knows me
personally inside Ukraine which includes
a lot of soldiers and many high-profile
figures some who are supportive of the
president and some who critical of him
literally all private community
communication has been positive and
supportive this is usually not the case
with me friends usually will write to me
to criticize and to disagree that's the
whole point of friendship to argue and
have fun doing it there was none of that
here at least so far so thank you for
your support and kind words it means the
world the most common message was please
keep pushing for
peace I
will but online on the interwebs I saw a
lot of attacks sometimes from swarms of
online accounts which of course makes me
suspicious about the origin of those
attacks one of my friends in Ukraine who
by the way thinks the attacks are all
propped up by Ukrainian B Farms said
there's no need to say anything extra
let the interview stand on its own just
keep focused on the mission of pushing
for
peace basically he's a Ukrainian version
of my
friend Joe Rogan who to this day says
don't read the comments this is
generally good advice and I try to
follow it but I'm also a human being I
wear my heart on my sleeve and this
interview this war for me is deeply
personal and the level of vital
misrepresentation and lies about the
conversation and about me personally was
particularly intense and disingenuous so
I thought I would use this opportunity
to say a few words just speak a bit more
about how I approach this conversation
with president zilinski and
conversations in general this interview
is something I poured my heart and soul
into preparing a lot I've described
parts of the preparation process I
follow in the outro to this Zas
conversation but in general let me say
that I've read a lot listened to a lot
and had a lot of private conversations
with people on the ground I have many
flaws but being unprepared for this
conversation is not one of them two low
effort attacks got to me a bit if I'm
being honest though I am learning to
take it all in stride first attack is
that I'm unprepared uninformed or
naive I don't give a damn about the
Trolls but I want people who listen to
me who support me who care about my
words to know that this is not the case
it never will be the case for future
conversations ESP especially ones of
this
importance I work extremely hard to
prepare second low effort attack that
got to me a bit is that I'm a shill for
zalinski or a shill for Putin both
accusations were hurled readily and
freely by the online mob of all
Persuasions by the left and the right in
the United States and Europe by the pro
and the anti zaleski people in Ukraine
or of Ukrainian Origins and by the pro
and anti-putin people in Russia or of
Russian
Origins as I've said over and over this
is not the case and will never be the
case I'm a shield for no one more than
that I just simply refuse to be caught
in any one single Echo chamber it's an
ongoing Battle of course because social
media algorithms and the various
dogmatic groups and tribes out there
want to pull you in to their warmer
Embrace of belonging and human
want to
belong but the cost of the path I have
chosen is that I will never belong to
any one group in the end like many of us
must I walk
alone and I try to do my best to do what
is right to my independent heart and
mind not what is popular with anyone
group my goals for this conversation
were twofold first give a large platform
to president zalinski to explain his
perspective on the war and to do so in a
way that brings out the best in who he
is as a leader and human
being second goal was to push for peace
and to give him every opportunity
possible to signal that he's ready to
make peace and to provide his vision for
what that might look
like and just to be clear by peace I
mean longlasting peace that minimizes
suffering of people in the region and
maximizes the flourishing of humanity in
the coming
decades the war in Ukraine has led to
over 1 million casualties and growing
every single day for some people torn
apart by loss tormented and forced into
a state of anger and hate peace is a
dirty word to them nothing less than
Justice must be
accepted I hear this pain I've seen the
bodies and the suffering
it's true peace will not bring back your
loved ones but it will prevent further
Slaughter of more people each of whom
are someone else's loved
ones so again the second goal of this
conversation was to push for this kind
of
Peace so how did I approach it every
conversation is its own puzzle so let me
try to explain my Approach for this one
as I've said I read and listen into a
lot of material since February 24th
2022 there would be many weeks over the
past 3 years where I would spend every
day over 8 hours a day of focused
reading and
research there were several rabbit holes
that I consistently returned to and
researched but the most important line
of inquiry was always peace talks not
just in this war but in other Wars in
modern
history for this specific War as part of
the background prep I would take notes
on every single perspective I could find
on every single major diplomatic meeting
and negotiation that happened in Ukraine
Russia relations since
1991 there is a lot of material to go
through and there are a lot of
perspectives even on the very 2019
meeting that President zalinsky spoke
about in this podcast just as a small
but important example Andre bokan was
interviewed twice by Dimitri Gordon and
gave a deep inside look of the
administration of President zalinski
including that very 2019 meeting the two
interviews are 7 and 1 half hours by the
way and from my interviewer perspective
are a master class of
interviewing Andre bdan worked directly
with President zalinski as the head of
the Office of the President of Ukraine
he was there for the 2019 face-to-face
meeting between Vladimir zinski and
Vladimir Putin at the Paris Summit along
with French president Emanuel macron and
German Chancellor Angela Merkel this was
part of the Normandy format peace
talks in those two interviews Andre bdan
gave a very different perspective on
that 2019 meeting then did President
zalinski to me in our
conversation the perspective being that
the failure to negotiate a ceasefire and
peace was not a simple one-sided story
I don't think this is the right time for
me to dive into that data point and be
critical I'm not interested in being
critical for the sake of criticism I am
interested once again in productive
conversations critical or otherwise that
push towards peace the kind I described
earlier this is merely an example of a
data point I was collecting in my brain
there are many many others but all of it
taken together made it clear to me me
and I still believe this that it is
indeed very difficult but possible to
negotiate longlasting peace with
Vladimir
Putin it is certainly true that Ukraine
is best positioned to negotiate from a
place of strength after the invasion of
February 24th 2022 I believe there were
three chances where peace was most
achievable first chance was March and
April of 2022 with a successful defense
of the
North Second Chance was the fall of
2022 with the successful counter
offensive in hon and Har the third
chance is
now as he has stated multiple times
publicly Donald Trump is very interested
in making peace it is likely that the US
Financial support for this war will
continue to dwindle so the leverage and
the timing for peace negotiation is
now there is unlikely to be another
chance like this for a long
time just to zoom out on the
conversation piece of this I interviewed
Donald Trump and may do so again I
interviewed Vladimir zalinski and may do
so again and it seems likely that I will
interview Vladimir Putin in Russia in
the
Kremlin I understand the risks and I
accept them the risks for me are not
important I'm not important I merely
want to do my small part in pushing for
peace in a moment in history when
there's a real chance for that peace to
actually be
achieved I may be speaking too long I'm
sorry but I can probably speak for many
more hours so this is in fact me trying
to be brief so again my two goals were
to bring out the best in president
zalinski as a leader and a human being
and to give him every opportunity
possible to signal that he is ready to
make peace and to lay out his vision for
what that peace might look like
like I said Step 1 through 10 is prepare
well I did but Step 11 is the actual
conversation there the specific
psychological and personality quirks and
qualities of the guest matter a lot my
job is to try to cut through the
walls we put up as human beings
and reveal directly or indirectly who
the person truly is and how they
think with zalinski he is a deeply
empathic and emotional human being being
who personally feels the suffering of
the people of Ukraine in this war this
is a strength and perhaps also a
weakness but it is an important part of
the reason why I said many times that he
is a truly historic
figure very few leaders in recent
history would be able to pull off what
he did to stay in Kiev to unite the
country to convince the West to join the
war effort to the degree they
did he is also a showman to borrow the
title of the biography I recommended a
man with many layers of humor and wit
but also ego and
temper sometimes fully self-aware and
sometimes losing himself in the
emotional roller coaster of a painful
memory or a turn of phrase that he can
use as a springboard for a angry
Soliloquy add to this the fact that we
didn't agree to anything what we will
talk about or how long we will talk
about it the interview could have easily
been 5 minutes or 3 hours so I had to
quickly gain his trust enough to open up
and stay for a long form conversation
but push him enough to reveal the
complexities of his thought process and
his
situation this is where humor and
camaraderie was essential and I would
return to it often though it was very
difficult given the stakes the heaviness
the seriousness of the topic of the war
so in this case the approach I followed
for this conversation is constant nudges
and questions about peace often using
almost childlike statements or questions
I generally like these kinds of
questions on the surface they may seem
naive but they're not they are often
profound in their Simplicity like a lot
of questions that children ask remember
it was a child who pointed out that the
emperor was not wearing any
clothes I like the simplicity the Purity
the boldness of such questions to cut
through the to the
truth and that truth is that hundreds of
thousands of people died in this war and
are dying every
day and all the other problems from
corruption to suspended elections to
censorship cannot be solved until peace
is
made I give the president every single
chance to Signal willingness to
negotiate knowing that both Trump and
Putin will listen to this convers
ation I don't think he took it and
instead chose to speak very crude words
towards Vladimir Putin this is fully
understandable but not directly
productive to negotiation to clarify I
have hosted many conversations that were
intensely critical of Vladimir Putin
from sirohi to Steven ckin but this
conversation is with a world leader
speaking about another world leader
during a historic opportunity for for
peace crude words of disrespect while
powerful May harm
negotiations peace making in this
situation requires compromise in order
to avoid further death and suffering and
I believe it requires treating the other
leader with a seriousness you expect him
to treat you with this is what I was
pushing
for all that while also putting my ego
aside and letting the president shine
which is necessary to accomplish both
goals one and two that I mentioned
previously this is also why I wanted the
president to speak about Elon and Trump
to extend the olive branch for further
Avenues of peacemaking this is not about
politics it is once again simply about
peace now all of this my words my
attempts were taken out of context and
used to attack me by some online mobs as
an example president zalinsky said in a
mocking tone that he think thinks that
Vladimir Putin is simply irritated by
people who are alive in Ukraine and I
answered quote if you believe this it
will be very difficult to negotiate if
you think that the president of a
country is completely crazy it is really
hard to come to an agreement with him
you have to look at him as a serious
person who loves his country and loves
the people in this country and he
conducts yes destructive military
actions
the president interrupted me at this
point and said who are you talking about
now who loves this country and I said
Putin do you think he doesn't love his
country and the president answered
no again this is not a podcast
conversation with a historian or
activist and I somehow out of nowhere
just for fun waxed poetic about Putin's
or zalinsky or Trump's love of nation it
is a conversation with a world leader
discussing the opportunity to negotiate
peace when a large number of people are
dying every single
day even if the heart boils over with
hate leadership now requires sitting at
the negotiation table and compromising
this may be painful but it is
necessary there are a few other places
in the conversation where some online
mobs took my words out of context and
used them to call me naive and to call
for more war saying peace is impossible
with a man who they claim is the second
coming of
Hitler my friends if you make such
attacks on this conversation it is in
fact you who are naive and ignorant of
The Facts of history and
geopolitics peace must be made now in
order for death and suffering to stop in
order for Ukraine to have a chance to
flourish and in order for the drums of a
global war to stop
beating a global war that would
Humanity this was my goal once again to
push for
peace and I will continue this effort to
the best of my
ability thank you I love you all