This is the Reason Interview with Nick Gillespie. Thank you so much for coming out tonight at the Blue Building. This is a live Reason Speekies event in New York. And tonight, we are more specifically, I am talking to Jennifer Burns, a historian whose new book is Milton Friedman, The Last Conservative. Please give a warm welcome to Jennifer Burns. Thank you. Thank you, New York. I'm going to do all my talks in New York. This is so awesome. Thanks for coming out. It is oddly a city that Milton Friedman really didn't hang out in all that much, right? He was missing out. Chicago, Chicago is what, it's not even the second city anymore. It's the third city. And then he went to San Francisco, even further down the list.  Actually, it's a little known fact. I'll think of him as a Chicago school economist. His PhD is actually from Columbia. Columbia is practically Connecticut. All right. No, point well taken. And he worked here a bit before and after World War II. Yeah, he had a whole East Coast life. He had a New York world. He spent time in Vermont, New Hampshire. And of course, he was forged in the steely cauldron of New Jersey. That's right. Suburban New Jersey. Only the strong survive. The greatest state in all the union. Let's start by talking about why Milton Friedman. Why did you write a biography of Milton Friedman? So it wasn't part of a plan. It really grew out of my first book, which was a biography of Ein Rand. The Goddess of the Market. And once the Goddess of the Market, Ein Rand and the American write. Another person who had a real New York history, although she loved New York more than Friedman. So, you know, I finished that project. I didn't really know what I was going to do next. And I was doing a variety of different inquiries. I was looking into kind of a concept history of the idea of neoliberalism. What was the sort of first moment? This was a buzzword. What is neoliberalism? I was thinking of writing a broader synthetic history of conservatism, conservative ideas. I felt like I had maybe a third of the story based on Ein Rand and the research I had done. And I was thinking of Rand as really a bottom-up figure.  Nobody said, read her, listen to her, actually. They all said the opposite, yet she found her people. She found her audience. So Friedman, I thought it was very different, kind of top-down, elite, credentialed. And eventually I realized whichever one of these projects I did, I had to wrestle with Milton Friedman. And so once I started to do that, I kind of had the biographical itch again. You called five foot one of him, right? That's right.   So I think Friedman is a really, is the best example of thinking about how market principles and ideas can be taken outside of the field of economics and applied more broadly. I think he probably does that more broadly than I would. But nonetheless, I think he shows that real power of sort of abstract thought and analysis and the way that once you take something out of the context, the intellectual context in which it grows, it can have all kinds of, you know, unintended consequences and can also be very powerful. Where did that come from?  Was he the child of immigrants or the grandchild of immigrants? He was the child of immigrants. And he was growing up Jewish and mostly in Raleigh or New York. Yeah, so he grew up Jewish in Raleigh, New Jersey. So small town America, very different than most Jewish immigrants they landed in New York. They landed in Chicago. They had a really urban, more collective experience and lived in these Jewish ethnic communities. And he had, there were about 10 Jewish families in Raleigh, New Jersey. So he's really immersed in that kind of broader Anglo Protestant culture. And I would say his parents were successful, but they weren't exceptional in any way that would make you think they would, you know, give birth to Milton Friedman. Although I have to say he had three older sisters. And as I was looking through their high school records, I realized one of his sisters was actually ranked higher than him and like one more award. So it's clearly a very distinguished family. And I think that it was this kind of drive to know the world, to explain it. And it got really supercharged by the experience of the Great Depression. I think without the Great Depression, he may have been more focused on mathematics or kind of a more technical field. But he came to believe it was just wonder like why are people so poor? Like what just happened? You know, this is he graduates in from college in 1932. And that's what really changes his focus to economics. And then we have to understand the 1930s as well. There's this huge economic crisis in the United States. It's not just in the United States. It's enveloping all of Europe. There's also the rise of totalitarian governments. There's the rise of murderous antisemitism. There's all these crises in the world. So it is a time to go back to what are the first principles? What are the fundamentals? What are the ideas we need to get ourselves out of this predicament? Can you, he undergrad, he went to Rutgers and he encountered a couple of people there who kind of shaped his life. Then he went to Chicago, is that right? And then Columbia. Yes. Can you walk through, you know, a lot of people in his situation going to college and, you know, during or graduating into the depression would have been like, well, what we need is an antidote to capitalism. Capitalism has failed. He took a very different lesson from that. That really from the beginning put him at odds with the kind of consensus. Who were the people who helped him develop, you know, a counter cultural set of ideas? Yeah. So at Rutgers, he actually his first economics class, he didn't even like think was interesting at all. He doesn't mention it at all. It's not his transcript. He doesn't mention it at all. He became inspired to go into the field by Arthur Burns who becomes this like lifelong relationship and Homer Jones. And they both pointed him to Chicago. What's really distinctive about Chicago and I didn't didn't know this when I began the research. I thought I would get to Chicago, you know, going through the archives and trying to understand what is the intellectual world into which Milton Friedman landed. And I thought it was going to be laissez-faire economics. Like this is a market correction. It'll eventually solve itself. And I found something very different. I found his professors banding together and they created something called the Chicago plan, which called for very significant interventions in the banking system. It called for really elaborate federal relief or very substantive federal relief. About, I don't know, 90% of the Chicago plan is eventually enacted in the 1935 banking act. But if they had had their way, they would have gone even further. They had this pet idea of 100% money, which basically means no fractional reserve banking. They would have completely revolutionized the banking system. And so these are Friedman's professors. And I was like, wait a second, am I not studying the Chicago School of Economics? So I really had to kind of reset and think what's going on here. So to answer that question, what did Friedman get? He got a set of ideas about the importance of markets, the importance of limited government, the importance of what they call liberalism at the time. Yet, they also got people who were very committed to responding to the social conditions and the economic crisis around him. So from the beginning, he thought of these ideas as very dynamic and is tied to political advocacy and political change. So that's like one piece of the puzzle. The other is that he was immersed in the Chicago tradition of monetary economics. And so the monetary perspective, again, pointed to banks appointed to the financial system. And it gave you a way to think about kind of aggregate economic activity that sometimes we think, well, that really only happened with Keynesianism. But if you're thinking about money, you're thinking more systemically. So he had an explanation that was basically we have problems. We have a liquidity crisis. We have problems in the banking sector. We know what this is. As he'll later argue, we have some institutions that have made it worse. But it's not like a phase transition in the economy. It's not a sign of secular stagnation. So he had another explanation. And what's interesting is that the economists that were like maybe just two to three years older than him who became the really the sort of lions of liberal economics and of Keynesian economics. They got there just a little bit later when the new explanation on the ground was Keynesianism. So Friedman was just that little bit older where he came in. He got the monetary explanation and that was really all he needed. Can you explain briefly what his read on the depression was? So it wasn't that capitalism was broken. It needs to be replaced wholesale. It's that, you know, something has gummed up the machine. Yeah. So what was that? It's interesting because I can see from his notes and his thinking that he already has this idea that inflation is a monetary phenomenon in the 1940s. I mean, I see him writing this famous statement he makes in the 70s. We associate with the 70s. He's got it very early, but he's still trying to work out like what does it look like? And so that will be the basis of the book he writes with Anna Schwartz. And so that's another New York connection because Schwartz is here toiling away at the National Bureau of Economic Research. And doing most of the research and the analysis. And they will eventually come up with this broader framework of monetarism. But what really makes the book so famous and really catches people's attention is this reinterpretation of the Great Depression. And they have a chapter where they call it the Great Contraction. And so the idea they argue is they put together all these figures of Schwartz has literally gone to the vaults and gone to the books. And when she can't find the numbers, she like pesters the bankers like help me get the numbers and adds it all up. And they step back and they say, we lost one third of the money in circulation during the Great Depression. That's why it was so bad. The money was destroyed as the banks went on. Yeah. Where did it go? It disappeared because in fractional reserve banking, the bank takes your deposit and then it creates more money by lending against that. And as we've seen from recent bank runs, it works because of trust because everyone doesn't want their money all at once. If you want your money all at once, it's not there. It's like a weird kind of psychological you have to you have to trust just at the moment when you're least likely to trust. Because there's the famous scene and it's a wonderful life, which I think is from 1939 or there or no, maybe a little bit later, but where there's a bankrupt. Yeah, and the the so we have to remember there's no FDIC. And this is one of the reforms that comes in in 1935 and it's the type of thing his professors are calling for because it really fundamentally undermines trust in the system if you work hard to save your money put it in a bank and then it disappears. I mean, that that's just devastating. So, so he believes that this is a system wide crisis and he in short start homing in on the Federal Reserve, which is created. I think it goes into operation in 1914. So it's new. It's not that it's not that established of an institution and they say, wait a second. The Federal Reserve system was created for this problem to support banks to intervene in a liquidity crisis. It didn't do that. So it stepped back and it just watched it happen. So it turns out that the people that I thought were the Chicago economists who would say, Oh, just let the market go down. It'll correct itself. It'll come back up. They weren't professors of economics, but that was a very basic approach in the banking world. You know, it's oh, it's a correction and we shouldn't it would be moral hazard and use a term moral hazard. It would be it would be wrong to help out a bank that's weak because that's its own fault. You know, the insight has to do with the money supply and that the Fed or you know that money disappeared and the Fed contracted the money supply at the time they should have been loosening things up. There's that insight, but then there's also the method that that Friedman and Anna Schwartz focused on, which really was empirical. How odd was that for an economist to be really, you know, looking at facts rather than theory. So one reason you know the empirical stuff was out of fashion was because Anna Schwartz was doing it. They wouldn't have let her do anything that was particularly cutting edge was like, okay, fine, you can go add up these numbers. And this actually comes out of Friedman's first series of jobs. He got his first jobs on the federal government during the New Deal when there was a great effort to measure both the crisis and the programs and just the general population. Like, okay, if we have a consumption problem, people can't buy what they need. How much do they need? How much do they typically make? And so the New Deal agencies were, you know, doing this type of work, but this was not what professional economists were doing, especially after World War Two. They moved much more to mathematical techniques, general equilibrium models, bigger partial equilibrium models, just models and abstractions that would show you how the whole fits together. And they would be feeding in a few variables like the interest rate or the federal budget or the multiplier, the Keynesian multiplier. And it meanwhile, Friedman was, because he had this connection to this woman's world of consumption economics, like immersed in this data. And so it was terribly unfashionable. Money was terribly unfashionable, which is like such a strange thing to say. But because of the experience of the Great Depression, people believe that the Federal Reserve was really powerless. And so Friedman and Schwartz end up arguing it could have done. Yes, it was powerless, but that was because it made mistakes, not because it lacked power, not because money was a meaningless veil over more important forces. To focus a little bit on that issue of consumption, Friedman in an interesting way was kind of doing women's work, right? Yes. Consumption was some, this was home economics, like what do people buy, etc. And Anna Schwartz is part of that as well as his wife, Rose. Director was her maiden name and she had a master's in economics and she also worked in similar fields. What was gained by looking at consumption data rather than these grand theories? So yeah, I'll say this is another thing I didn't expect to find was the number of women who worked closely with Friedman who collaborated with him formally or informally in all of his major publications and basically all of his major scientific work. I was very surprised to find that. And I think what that did is it brought in this just set of really empirical data and understanding kind of how people made spending decisions that you could lose track of. You were taking the more theoretical approach which seemed more important. So one of the kind of outputs of this is the theory of the consumption function in which Friedman ends up arguing for the theory of permanent income, which is still a concept that economists use today. And that came out of these women that he knew they were mostly friends of roses, and they were studying farm income and this was Dorothy Brady Rose's best friend and Margaret Reed who would eventually become Chicago's only woman professor tenured woman professor in that era, and they were trying to figure out like, you know, a farmer if you buy a tractor, you spend a lot of money this year but you don't spend that the other year or if you have a really good harvest you get. So, how would you make sense of these ups and downs and so they ended up and then looking at what farmers actually did ended up concluding they sort of naturally smoothed it. They anticipated what their permanent income would be over the course of their life. They kind of smoothed it out and now this was important because it ended up really putting pressure on the idea of the Keynesian consumption function, which had a very, had this idea there was a very clear relationship between consumption income and if you had that very clear relationship, you could measure the multiplier you could understand the impact of a stimulus program, you could design more stimulus programs and what Friedman's immersion in the data showed and really these women kind of brought this finding to him and he theorized it was that's not really true like it depends there's many other factors at work that predict how much people will spend their money so it just a clouded this, the Keynesian paradigm that had been very clear cut previous to that. He or one of his early very influential essays talked about economics as a positive science and it's, can you explain that and was that almost a uniquely American response to kind of European theory I mean is it pragmatics or empiricism versus. Yeah, this is the methodology of positive economics which, you know, sometimes gets analyzed in terms of the basic gist is, what is the test of a theory, a theory is only good in so far as it predicts what will happen in the real world and so you can this does come out of conversations with Carl Popper. It's, it's been taken up as a kind of methodology of science or in these debates on the history of science what I discovered is, it was actually incubated in Friedman's battle with the Coles Commission, which was a group of European emigres, many trained in physics or math, who were in the Coles foundation for economic research at University of Chicago and this was basically a parallel economics department and they kind of had joint appointments, and they were the modelers, and they were also very much politically left, didn't have to necessarily be the case so there line up between doing a model that tells you what the policy should be and endorsing an activist policy. Anyhow, Friedman just didn't like these guys at all and they believe me did not like him. They were just like, you know, oil and water so these guys were more on the left Friedman was more conservative they wanted to do these big models Friedman was like very suspicious of that. And what made it really difficult was that Friedman was very talented as a mathematician and actually had written several really important papers in statistical economics so they sort of knew he could do what they were doing and he was choosing not to. Let me go back to that essay that essay if you read it in light of this conflict with Coles is a methodological argument against abstraction in economics. What's that influential. Yes, over time it was. And I think it actually I found some economists talking like in the 80s and 90s and they would they would kind of simplify it to well assumptions don't matter. All that matters is that we can predict Friedman proved assumptions don't matter. And that's really not what he was the overall message I think it was more about you have to test your theories against empirical data from the real world but what he was able to say is that sometimes you make very unrealistic assumptions so one would be this assumption of rationality doesn't matter if you think it's unrealistic that people individually are rational it matters if you combine them all and you look from 30,000 feet up at the aggregate. They act as if they're rational, and that's enough to go on so it has been hugely influential but maybe in it's been interpreted in its own set of ways. Let's before we go on to some of his other insights and kind of policy positions or thoughts that really had major influence on you know the world we're living in now. Let's talk a little bit more about monitorism as you know what is the theory of monitorism as kind of simply put as possible. I could do it in two words money matters. So the name of one of his last major book. Yeah. Yeah. Money mischief. So money matters goes back to this idea that money is not a veil it has active force in the economy. And so that just became kind of his push for looking at looking at money historically and in the moment but but also monitorism grows up in opposition to Keynesianism. And so the idea being what is the what is the way to underwrite economic growth with in the Keynesian synthesis. Economic growth requires a more activist federal government and it specifically requires a taxing and spending powers of the federal government to be strategically deployed to enhance economic growth and monitorism is an alternative that says no economic growth comes from private economic actors who will generate plenty of ideas initiatives innovations if left alone but they need a steady monetary environment. If you if the price level goes up and down or fluctuates too much those private economic actors retrench they hold their money they don't know how to make investments or plan. And ultimately inflation which is the big volatility and all of this is always an everywhere a monetary monetary phenomenon. It's not about taxation or you know government wage price spiral or monopoly. And so yeah that that becomes an essential part of the story. And then in the 60s and especially the 70s monitorism ultimately I mean he's been kind of honing this theory for decades and then the time is right for his explanation of what's going on. Can you talk a little bit about how what started to happen in the late 60s and the 70s couldn't be explained very well by kind of Keynesian or consensus economics and people were looking for an alternative explanation which he seemed to provide. So let me say two things the other core of monitorism besides money matters is what Freeman called like the K percent rule that you should pick a percentage and he said 4% and that's what the money supply should grow at this 4% rate and then that would provide enough room for the economy to grow but people would know this is sort of what I can count on but also that it's it's set right it's kind of like it's a rule. It's very important and that's another piece of the Chicago tradition rules over discretion. We can also think about this is almost a Hayekian idea that you create the framework for competition, the rule of law stable institutions and then you let kind of activity unfold. So it all it all really kind of has a philosophical symmetry under the surface. So the other thing that's challenging though is they call it the paradox of monetary policy when it's done right you don't notice it. It's only when it's done wrong that you notice it so it's sort of it's it's a hard thing to get anyone to care about because you don't get it you know if you're a politician you have a good monetary policy nobody really notices. They do notice when you have a bad monetary policy. So if Freeman first made his name analyzing deflation which was the great contraction. You know he really has a the the the move into more influence is in inflation the kind of flip side and so you know throughout the 60s.  And then Freeman will pop up in Congress and say oh yes that was that monetary expansion that then with a long and variable lag has led to an economic expansion and they're like you know there's a quote from Walter Heller he's like so what we're just playing fiscal tiddly winks in Washington. They feel very diminished by Friedman. So at any rate in 1960s they could ignore him to one of the things you point out which is really hard to kind of understand that after World War two there was generally you know the economy was in pretty good shape.  Exactly like what you know he seems like a doomsayer sort of like a prophet without without honor so but eventually this doomsaying comes to seem really relevant so in 1967 he makes this famous speech at the American Economic Association and he this sort of idea previously is like we don't really need to worry about inflation and even inflation can be good because a little bit of a price rise means like things are really humming. And generally they'll be lower unemployment when there's a little bit more inflation and so it's kind of a trade off and Friedman says you know this trade off it might work in the short run but it's not going to work in the long run because it's theoretically possible and he goes on to explain how that you have a rising price level and then eventually you have rising unemployment because of all the ill effects of inflation and uncertainty.  Based on what the Fed has been doing we're going to be heading into an inflationary period so he just like makes this prediction and in everyone thinks. It's a novel it's arresting here's this provocateur they don't agree with it and then in the early 1970s because of the combination of Vietnam war spending social spending. And a very loose monetary policy that inflation starts to emerge and so you have these economists you were kind of they have their models and they're running the numbers and they're saying oh Friedman's wrong oh Friedman's wrong and they're like well he could be a little bit right and eventually they're like by gum he's right and it really that long run that trade off disappears over the long run as he said in this more inflationary environment. Can you in the book you do a fantastic job of painting the various characters and you've mentioned Arthur Burns who at this point was Friedman's professor and friend and then became the head of the Federal Reserve under Richard Nixon and they come to a kind of dead end right. Can you talk a little bit about that and yeah what does that say about the way Friedman kind of operates intellectually and politically. So I guess I'll start by saying I'm not related to Arthur Burns. And I would say Arthur Burns is not just a professor he's not just a friend he is the sort of model of how to be in the world Friedman calls him a surrogate father. So Friedman loses his father in I think a senior year of high school and it's not long after that he meets Arthur Burns and as we talked about his family is sort of a typical immigrant family. He doesn't really have a role model and he sees Arthur Burns professor at Rutgers also from a Jewish immigrant family and just says wow so who has waspified himself he's become fully kind of presentable and elite culture. Yes and he ends up having especially when their barriers anti-Semitic barriers kind of drop in World War II ends up you know he advises Eisenhower he's a professor at Columbia you know he's the head of the NBER. And actually a lot of what I know about Friedman and his life and that like one of the best sources for this book or the letters he would write to Arthur Burns because they're long letters throughout every step of his career because they're close but they're not physically close. And they're also like kind of dear diary like he just writes like these very open ended kind of musings and thoughts and personal stories to Arthur Burns so that's like the biographers gold when you find a correspondence like that. But then the correspondence really takes this sharp turn Burns is appointed by Nixon and everyone thinks oh it's now a Friedmanite Fed you know they're really going to be inflation hawks money nobody's going to question if money matters. And Arthur Burns it turns out it's not a monitorist and he doesn't actually have a ton of really clear ideas about what the Fed should do and he thinks that inflation is caused. You know by wage price spirals he's not really sure but he doesn't really have a strong sense that the Fed is responsible for inflation so he ends up advocating. For what is called incomes policy this is wage and price guidelines which is like the first stage to wage and price controls which she will also eventually support and when Friedman so apparently what happens I know from this letter. You know freeman picks up the newspaper and he opens it and it says like Arthur Burns supports incomes policy and he's like. What you know how can this be and so I quote from some it's it's a letter it's like the it sounds like the end of a love affair letter you know he writes this letter to Burns it's he gets he tries to go to sleep he can't sleep. He like wakes up in the middle and like Arthur how could you you know I feel betrayed you know it's just really intense letter and then even before Burns can write back he sends another one because. Friedman is the number one critic of the Fed he's like the Ron Paul of this day you know he's just always criticizing the Fed and all of a sudden people are like. Well Mr freeman what do you think of what Arthur Burns has to say and he's like oh. You know I have to really say what I think and to him it's not an option that he. Prevaricate trim or you know oh Arthur's fine like it's it's really obvious that he wouldn't agree with Arthur Burns and he has to publicly disagree with him and says very painful and. They resuscitate a friendship of sorts but it's never the way it was. And he's also by this point freeman is writing a news week so he has like a very popular very public forum in which to bash. Yes right so he's basically has to sort of publicly attack his best friend in order to maintain his intellectual integrity and his reputation. So it's not easy. And Burns is really not happy and the letters are quite frosty. It's interesting. The book has some pictures of Arthur Burns who really is old timey. I mean Milton Friedman isn't mod he didn't become like you know he was wearing neighbor jackets in the 60s but Burns looks like he's stuck in. Yeah he had a pipe he always had a pipe the pipe was a fed share thing he got of a pipe at least back in the day to kind of just close out the. Sorry about monitor is so you know the 70s are really volatile in terms of unemployment in terms of inflation in terms of what became known as stagflation. Towards the end of the 70s Paul Volcker is named to the Fed head of the Fed and especially under Reagan. He seems to be kind of doing monitorist policy at the Fed but he's a reluctant person. And Friedman is kind of critic of him even though he did by most accounts break the back of inflation. What did Volcker do and why was it or was it not a kind of monitorist solution. Yeah it's it's tricky. So Volcker is definitely reading the the monitorist literature he's aware of the kind of. Revolution and ideas that Friedman is spearheading and he does believe like Friedman that sort of over the long run you can't trade off inflation and unemployment he absolutely believes that he believes that this is where they are now that trade off has broken down. And inflation has created an environment that's that's really bad for everyone in the economy. He's also interested in so Friedman's technical ideas to watch the monetary aggregates which are these specific measures of money that he and Schwartz have really sort of devised and popularized and so Volcker announces that he's now going to target aggregates so this is basically whatever one thought Arthur Burns would do and Volcker announces he's going to do it. It turns out I go into this in some detail in the book and there's sort of a debate was Volcker kind of playing with aggregates because he really wanted to jack up interest rates. I tend to think he was genuine in thinking aggregates work it was was a reasonable assumption to make it that moment and now it seems like it's not a reasonable assumption. Because the aggregates turned out to be very hard to control and there's deregulation and I want to bog down in all the details but Volcker sticks with it and eventually through the mechanism of very high interest rates. Is able to reset expectations around inflation is able to really kind of change the economic piece so. The way that Volcker kind of is in the shadow of Friedman is one in realizing there is no long run trade off and two I haven't talked about Friedman's mechanism of inflation but he suggests that expectations are a key part of the story. And so again this is sometimes lost because now we're like oh inflationary expectations like everybody knows this is why it's entrenched or transitory. This is like what Freeman puts on the table it's not that nobody ever thought about it but he says this is really the mechanism in which inflation accelerates once it gets going and of course the rational expectations will jump off of this a whole field of economics will jump off this idea of expectation. So this is one of these Friedman ideas that it's hard to see because we just think this is how things are this is like very natural thing and but he's really the one who puts it forward. So all that being said Friedman and Volcker do not like each other at all. It's just don't get along Volcker is really tall. It's really short. You know Volcker is like an establishment guy who will sort of work for any work for Republican work for a Democrat and Friedman is like more ideological and you know really only talks to and works with Republicans and so. And then Friedman is the academic who knows how his theory is going to work and Volcker is more like I got to try this I got to try that it's a complicated world and so. The result is that they it's really hard they know they won't give each other any credit whatsoever. We do know though that one person who did love Friedman was Ronald Reagan who is the president when Volcker is interest rates are 20% unemployment is spiking and. Ronald Reagan is getting a very consistent message from Milton Friedman which is stick with it do it now. You know this is 1981 1982 things are going to be better by 1984 this is going to work.  You know federal reserve. Controlling or affecting the money supply and it is amazing again you know we've had inflation and it's with us today but I mean when you look at how high interest rates were in 1980 81 82 and then they just really drop. Did and did that help. You know it did that the fact that Volcker seemed not to care. So yeah I mean there's another piece of the puzzle which is one thing Friedman was saying throughout the 60s and the 50s which made people think he was just absolutely bats. He said interest rates are not a good guide to inflation or rather interest rates are not a good guide to monetary policy interest rates don't tell you reliably if money is tight or money is loose. And this was like saying like the sky isn't blue because everyone was like of course we know that we look at the interest rate to tell if money is tighter money is loose and he's basically like it's a lagging indicator. So it could actually because we have a high interest rate that could be money was very loose and he also said eventually in a high in an inflationary environment that relationship is going to break down so Volcker also recognizes this that when you get inflation going. So prices are going up all the time and in order to make any type of profit on your loan your interest rate has to be higher than inflation. So if inflation is going up interest rates are also going to go up so then you actually have this total breakdown in the mechanism that's assumed they're assumed to work contrary you know in in contradiction but now they're working together. And this is also the concept of nominal and real interest rates. And the other thing that's really hard to recognize is the Federal Reserve does not distinguish between real and nominal interest rates prior to the Volcker era like they just don't think about it and almost nobody else does because there hasn't been inflation it's been a pretty steady states and the interest rate is also regulated and fixed. So why would you think about this relationship so Freeman however has gone with on a Schwartz all the way back to 1867. He's just got a like bigger piece of history to work with. And so that's another one of these things that sounds totally crazy in 1964 and like super smart in 1974. We are going to go to questions in a few minutes. Let's I'm sure monetarism will come up in the questions but let's talk about it some of the other big impacts that Friedman had. He pioneered the idea of school vouchers and he also talked about that in other contexts but that seems to be one of his most kind of fertile legacies we're living in a world now where more and more school districts more and more states. And you know local districts are offering school vouchers. What was his plan and how did that come into being. So a couple things to say about that. One is I'm pretty sure he got it from John Stuart Mill because there's a throwaway line and on Liberty where he mentions that and I know Friedman read that book as a graduate student. And so let me just preface this was saying you know part of the Chicago inheritance is belief in markets but also a concern about inequality and a concern about when markets don't work and those who are kind of left out. And so in the beginning of his career Friedman's really advocating policies that are akin to a universal basic income later reformulated as a negative income tax. When he comes up with school vouchers I think this is during capitalism and freedom when he's kind of doing what I said at the beginning how can we take kind of market concepts incentives competition and take them outside. You know just sort of commodities markets maybe or whatever would be the traditional objective economics. What happens over time though is Friedman shifts his focus from thinking the best solution to poverty and inequality is universal basic income. He shifts it to focusing on school choice and in part that's because the negative income tax is partially enacted and in part that's because he really starts to worry about globalization and he's a huge proponent of free trade and globalization. But a couple years into it it kind of dawns on him like the low skilled American worker is now in a global competition and our schools are not very good.  So he and Rose will eventually leave the money that they have to school choice foundation. So that really becomes part of this larger political economy where you try to think of like what is the biggest structural problem in capitalism and is that not everyone is able to participate in and compete in markets on anything like an equal basis in education. He comes to believe is that. And I know I interviewed him 50 years after the essay where he first talked about school choice and he rhapsodized about the Robway public schools. And I was going to get you know this but yeah he really had a powerful experience where the schools he went to seem to be he thought they were a great equalizer. Yeah I think so I mean he felt like he benefited from that education and unfortunately it wasn't available to everyone. And I do have to say though just to be clear he did also dream of a world in which all education was privatized so he might rhapsodize about the wrong way public school but also imagine a world where you know all education was privately provided. Yeah. And talk a little bit about the negative income tax and how have that you know why he fixated on that and then why that you know I mean that became part of the earned income tax credit and things like that which he was not so much a fan of. Yeah so what I discovered in the archive you know I read like probably 200 some boxes you know I just sift through and see what you're going to find and eventually I found early on in my research is called a proposal for guaranteed minimum income. I found a couple versions of this and I was like I wonder why Freeman has this paper and I kept reading and then I was like wait a second Freeman wrote this paper you know and I was like what. And so actually it happened in New York he apparently met Gunner Myrtle. I don't know where or how somewhere who shared the Swedish economist very lefty shared the Nobel Prize under complaint or protest with Friedrich Hayek. Right. And who was very well known in later years for an American dilemma study of American race relations and so somehow they meet they get to talking. And they decide that some type of minimum income is this like great policy so Freeman writes his first proposal and then when he turns up at Montpeler and you know eight years later he's also like banging the drum for universal basic income and basically the idea he as he sees it is this is because it compatible with the liberal polity because it would be sort of counter cyclical you would get it when when you needed it. And he basically sees it as giving people a way to get into markets without compromising their individual choice. And so as opposed to having and you also have to remember this is the era of very intrusive welfare programs I mean they're still intrusive in different ways but you know if the welfare inspector came to your home and you were married woman had children and you were being supported and they saw a hat a man's hat in the house you could lose your benefit you know so the very kind of snooping and prying so he envisions this welfare system and which will just be provided with cash and you'll make your own decisions about how to use it and you'll figure out you know what is a basic social minimum that people need. So, so he's very fond of that idea and he eventually supports it through and decides it should run through the tax system. And in the 60s is very widely discussed and he'll make some modifications to say, you know we have to be careful the benefits cliff and maybe you want to have a work, you know, reward income more but he says a lot of the same things that sort of today's proponents of you be I will say about its potential, you know, efficacy. Had an abiding respect for the little people right like he really thought that virtually anybody would, you know, given some freedom would make good choices or better choices than other people could make in their lives. Where did that come from. That's an interesting question. I mean I think he's just very optimistic. I think we also in a way when you kind of step back, you might not think of him as the sort of like quintessential 60s figure but he kind of is, he's kind of sticking it to the man. You know, he kind of wants everyone to be free, fly their freak flag you know he has some of that. He's very freaky. Yeah. He also decides over time, you know, he, he wants to be a supporter of capitalism but he doesn't want to have any kind of social Darwinist kind of the strong make it in the week fall by the wayside so hence his interest in, you know, whether it's UBI or school choice but he needs another grounding for capitalism and he eventually decides its freedom. And that's kind of the central value and so once he latches on to that it just, you know, becomes more and more important. Right and the first version of that kind of as a big text is the book he wrote with roses, assistance capitalism and freedom. Yes. He sees them as mutually reinforcing and then later free to choose. It's all about giving people more ability and not only to make choices but to actually be able to participate. Yeah. Talk about his role in ending the military draft. Okay, so that's another interesting one. So again, think of like Milton Friedman is the quintessential 60s figure he's very much against the draft and he again sees that as like a straightforward violation of individual rights that the state has some type of ownership claim on you he just philosophically objects to that. He's very much in the way that I'm randid. He's very different, though, from F. A. Hayek in Von Mises who basically are like coming out of the European experience. Sometimes you need an army quick. And so we should still keep conscription that's that's kind of a divide. And so he does a couple of things. He by this point is a really big figure in the culture. And so he is able to talk about ending the draft and he's like a Republican economics professor. He's very respectable. So he kind of shifts the politics away from the kind of hippie long hair, you know, left leaning vibe and interestingly Buckley also supports it and Nixon is again the one who will push the policy through so it actually does have a lot of conservative support. And then he also will, you know, support this analysis, which basically says the number one argument against the draft is from the military, who like the way things are, and who say it's going to be way too much money. This is how they just basically say we can't even consider it. And so Freeman comes and says, look, sure, you're looking at one sticker price, which is the cost of paying your soldiers. But you're not looking at the unseen cost, right, the scene and the unseen, the unseen cost is you're taking a huge swath of your, you know, men out of the labor force in their most productive years. So he kind of reorients it to this other metric, but he also makes it about kind of costs and benefits. And there's a moral piece, but that's not really what he leads with. Now the other thing, and maybe I'm wrong about this, so let me know if you find it, it could not find Milton Friedman saying anything about the Vietnam War and his thoughts on the Vietnam War. He managed to lead this public campaign against the military draft without commenting on the war. And so to me was just stupendous that he was that because he didn't have an opinion which seems hard to believe. It seems hard to believe. I think he just felt like the most important thing I can do right now is end the draft. And if I sidetrack into a debate on the war, I will lose like the message that I have. And you point out in the book, it's deeply touching actually that he relied on an economic cost-benefit analysis put together by a Japanese American whose family had been interned in World War Two, and that helped end the draft. That just is a beautiful kind of symmetry. Yeah, one of his students, Walter Oye, yeah. And it's also amazing how quickly the draft ramped up during the 60s from several thousand a year to 400,000 a year, I think in 1966 you point out. So this is gigantic. Let's talk about Chile before we go to one more question. Why is Milton Friedman tied so tightly with the Pinochet regime, which was a repressive tyrannical regime that ultimately after that period was over, Chile was for many years the kind of best performing economy in Latin America. But what did Friedman do and is it right to link him to the Pinochet regime? It's an interesting question because he didn't spend very much time in Chile. So the kind of story starts with the United States government funding students to come and study from Chile at the University of Chicago, which was part of a broader kind of effort to spread American ideas during the Cold War. And so this group of students, it's eventually about 100, is trained at Chicago. Only one of them is actually Friedman's doctoral student, but they take classes with him and they kind of get the whole Chicago set of economic ideas and they go back to Chile and they really are a minority to say the least because Chile is following import substitution, industrialization, ISI, which creates a very large role for the state and its protectionist in order to nurture domestic industries and big companies and the state are very much intertwined and they're called the Chicago boys, which is pejorative. And so they want to do sort of neoclassical economics, foreign policy, free markets, free prices, open trade, they really get nowhere. Eventually, I think it's in 1973 that Salvador Allende, who's a socialist, Marxist, is elected. And then three years later, I might be getting my exact date strong. I think it's 70, he's elected, 73, he's overthrown by Pinochet and a military coup. It's bloody, it's violent. And there's just a great deal of people during the Allende regime and afterwards. And so when Pinochet comes into power, the inflation rate in Chile is 600% a year. So it's a sort of macroeconomic crisis and a political crisis wrapped in one. And then a year in, they've gotten the inflation down about 300% of these still having a lot of problems. And it's at that point that the Chicago boys really been offstage. For most of us are able to come and get into the regime and say, look, we have a wholly different way to do this. We have a different set of approaches. Let's do that. And as, as we're getting, you know, this policy considered, they basically call Freeman and they say, can you come and can you talk about what we should do to like how we should manage the economy, how we can address inflation. So Freeman decides to come. He spends six days in the country. He meets a lot of, you know, members of the Chilean state. He meets Pinochet. He tells him, you should tackle inflation. You have to do basically a shock treatment. You have such bad inflation, you can't wait and you can't be a gradualist. He's a gradualist in the United States, but not in this hyperinflation situation. So then, and he also tells Pinochet, if you open the economy the way you will, you want to eventually you're going to have to liberalize. And from the accounts we have Pinochet's basically like, isn't this going to cause too much social pain and disruption and Freeman says you kind of have no choice. And that's the message he gives to the country more broadly. And so I have, I found a travel log where he writes all his like he the few days after he got back from Chile, he wrote all this down. So I have a really good sense of what his impressions were. We can't be exactly sure what he said because it's a censored press, but most of his talks were like pretty boring, like, you know, monetary policy at any rate, that is the policy that's put in place. And so Freeman really puts his kind of imprimatur on the market based reforms, and he doesn't view this as advising, you know, a politician with whom he's aligned. It's not as if he agreed to be on the Council of Economic Advisers of Pinochet because he supports his plan. You know, he's done it's it's the context is American economists flying around the world, telling socialist countries like become more capitalist right pretty common, common move. And so, men he leaves and a couple it's it's not too long after that one of Pinochet's leading opponents who's an exile in the United States is assassinated by Pinochet. You know, there's they have this kind of secret police it in a car bomb on the streets of Washington DC it's completely shocking. And then just a couple weeks later Friedman gets awarded the Nobel. And the man who was assassinated was quite critical of Friedman and interpreted Friedman as a supporter of Pinochet, and even thought he was part of the kind of architect of the coup. So then he's assassinated then the Nobel Prize happened so the result is just this all gets mixed together and it comes to seem as if the Nobel Prize committee and the sort of industrialized West has decided to approve and endorse the Pinochet regime. And so that's really a framing that's put on it by, you know, Chile and exiles, and who are very angry with Friedman and feel like he should just have steered clear of the country entirely so it becomes just a real. Real controversy it's very painful for Friedman and over time he'll realize he has to speak out more forcefully about political freedom. You know his remarks previous to that are really all about economic freedom and eventually he kind of realizes I have to talk about political freedom to so you'll see a shift. One thing I would say that you and I chatted about briefly offline is that, you know, Friedman doesn't come out in support of the regime but there are some other. Economist, most notably f a high who offer more justifications and defenses of the regime and I think in the kind of public memory. Friedman gets kind of lumped into that. And so it's all seen as this endorsement of a military government and Friedman's really horrified he's like I didn't ever perceive that going there to give my advice. He's an old expert on inflation there's 300% hyperinflation like of course I'm going to go and say, here's what I think should be done that doesn't mean I support Pinochet so he's, it's a it's a it's a difficult period for him. Why do you think that slag against him has been so long live though. And I just think is misinformation, you know there's there's a belief that the coup was done in the service of this particular set of economic ideas. And that's kind of like Naomi Klein's in her shock doctrine book. Yeah, there's some doc documentaries where it's seen that like this was all sort of part of a master plan and that it was necessary to you know people were so committed to capitalism that they needed an autocratic government to sort of force it on the country so I mean it's it's sort of an inverse narrative of the connection between socialism and you know authoritarian regimes and so I think it has some powers being in version of that. And I guess my hope is that with more information on what happened can have sort of like a better understanding of it. And is that kind of that connection is that the origin of when Friedman really started to talk about how when you get economic freedom political freedom comes traveling along. I think so what happened was then so this is like 75 he goes to Chile 76 is the Nobel Prize and then the Mont Pelerin Society has its meeting, I think it's a regional meeting in like 1981 which again is interpreted as like this is an endorsement, and Freeman's really worried about that and he actually gets some there's a an economist who was in the government and he gets him disinvited to the meeting because he doesn't want to feel like there's a connection and at this meeting Chileans are starting to say mimic the leftist line that like we only got capitalism because we had a strong government and like we needed that strong government to get capitalism and Friedman's like no no no no no no no this is not how it works and he starts kind of pushing back more. I think he's also trying to push back against Hayek and then talk more and I think, you know, for most of his career he's in American academia and he's taking political freedom for granted and he's thinking. My peers need to focus more on economic freedom and then he gets out into the world and it's like, oh, you know, maybe I need to be talking about political freedom first because these two are intertwined. Let's have some questions. Sir, your question, make it a question if we will have a withering glare. I'm an economic journalist who had about 20 conversations of Milton Friedman over the years. And you're going to tell us about each one. Yes, including a month before he died. I may well quote you in the book. Well, I think you should. The question. I had a recent debate with David Friedman and that point you make about David and his family is just hilarious. I embarrassed him a bit about that. But that aside, I loved your book because I love Milton Friedman. But of course, given my intimate knowledge of this guy, by the way, if you called him up, there was no answering machine. It would just ring for 20 times. Choose a question. Also, I want to butcher your point. I think you do make the point because screw Nick. I think you do make the point that Milton Friedman also advised the Chinese and nobody holds him responsible for the authority. Andy also talked to Tito and Yugoslavia. Yeah, yeah. So he talks to people and they don't blame him for that. But that aside, I do want to go at you for that classic point. The one thing when Milton Friedman insulted me the most was when he started to talk about the drug laws. And actually, I think at my best in my recollection, you don't mention that when he got started on the drug laws in my 20 conversation. And boy would he he wanted a complete abolition of the drug laws. But his famous statement was that look, my fundamental objection is that the government has no more right to tell me what I put in my mouth. As it tells me to what comes out of my mouth. And you yourself have said, and he also said, of course, that a government that pushes freedom will get more equality as well. And then on top of that, you've just reminded me that he not only wanted school choice, he really wanted the government out of schools. Would you like me to comment on the drug legalization? I'm not sure that he would, but let's talk about the drug war. The role of the drug war. You just made the point that he also wanted the schools out of schooling, the government out of schooling altogether. So that's why we libertarians, and then you yourself said he wanted to roll back about 60% of government expenditures. A lot of people would say that's very liberal. So do you want to roll that up into a single question? Yes. Why didn't you call the book, the subtitle, one of the great nights of libertarianism? You know what? I'll take that under consideration for the sequel. Thank you. Would you talk a little bit about the drug laws? Yeah. I mean, I think the commenter has summed up how that is really part of Friedman's worldview and that freedom and kind of liberationist ethos. Yeah, so I think he very much saw that as part of, and again, I think also Buckley also supported legalization, you know, to some degree. Squish it. I don't know what Friedman would make if you walked him down the street since San Francisco and said this is what it actually looks like. I mean, he tended to stick to his principles through thick and thin, so maybe he would stick with it. But I think we just saw Oregon, Portlandia, starting to take a step back from that when they see what it looks like. So maybe as a follow up, did Friedman, how would you talk about his change over time? Because did he became, he never became an anarchist. The son, David Friedman is a narco capitalist or help popularize that. Did he become more of a more libertarian or more of a minimal government? Yeah, I think he did. And I think some of that is evolution and some of that is changing context. So I think the Nixon administration was really a watershed moment for him because he saw how much the state grew under Republican. And it also coincided with his discovering of public choice and kind of really buying into that. And I think he concluded, look, the dynamic of government is growth. It just grows. And so therefore I've got to push back harder than I thought in order to restrain it. So I think maybe if the government hadn't grown as much as it did over the federal state, over the course of the 20th century, he wouldn't have shifted. But he really did shift. So he becomes much more anti-government as he comes into, just gets sharper, that kind of early Chicago ethos fades a bit. I think it's part of its popularization. And he's in free to choose. He has to really simplify. So you get the monetary history is like the government caused the Great Depression, which is not really what the monetary history is really saying in the round. But then what I hadn't expected is in the last five or so years of his life, he gets reflective and he talks about a lot of the things he got wrong.  Next question. I was curious about Friedman's kind of engagements with people on other parts of the right to him. So you mentioned the conservative tradition, whether he read people like Russell Kirk or, you know, so that on the one side and then more radical libertarians than him, right, the free banking folks and so on. Good question. So the first letter he ever wrote to William F. Buckley was his co-signed with Aaron director and they were criticizing an article by Russell Kirk that in turn criticized the Mont Pelerin Society and Friedman kind of said young man, you know, kind of wagged his finger at Russell Kirk was never a young man. No, Buckley was the young man. Thank you. He had given him the platform. So he tended sort of like he avoided talking about the Vietnam War. He tended to avoid the kind of social and religious issues. And as they rose up into prominence, he really didn't comment much about them. He knew what he wanted to focus on. In terms of the anarcho capitalists, I mean, I think David was a real connection to that community. And I think he would say he might have said something like I wish I could be an anarchist, but I don't. I can't go all, you know, he just sort of fundamentally thought it wasn't practical. I imagine as a, you know, a Jewish man growing up in the 20th century, he feared anarchy a bit as well. And finally on the banking. I mean, if you look at the Chicago teaching, it's like the state and money are just they're intrinsically tied and Friedman thought even if you let a thousand flowers bloom and had all these competing currencies, eventually people would converge on one and you would basically recreate state money. So thank you. Could you very quickly, what was his relationship with Ein Rand like? Oh yeah. Well, Ein Rand called him a communist. That'd be fair. That's kind of how she said hello. Yes. And, you know, his quote on her was a very unpleasant woman who did a great deal of good. I think. And so there was a moment when the objectivist kind of took over the new individualist review, which was headquartered at Chicago and they started like heckling him and really making life. It was like, what is happening? And then he figured out, oh, these are Randians. So again, he tried to just appreciate her as someone who would get people interested in these ideas. But I mean, they were very different people. Next question please. So following up on that last question there, there were there are also some macroeconomic schools of conservative thought that differ from Friedman, but are very influential and concurrent with them. For instance, the supply ciders, you know, arguing about the centrality of good supply side tax policy. And then you have the free traders who argue that, for instance, the smooth Holly tariff was the real cause of the Great Depression and explains why it was a worldwide phenomenon and how this tariff force caused everything. So how did how did Friedman interact with those other macro theories that were extremely influential and all, you know, came together in Reaganomics, but he was only one third of that pie. But what do you think of those other two thirds that were so influential? Yeah, that's an excellent question. So with supply side, he was suspicious of it. And there's some early arguments where he's like, you know, sure. There's so in this specifically the supply side idea that if you lower tax rates, you will get more tax revenue because the lowering of tax rates will stimulate the economy. And he said, sure, that will be the case in some cases. I don't think it will work system wide. But I support it anyhow, because lowering tax revenue will the governor, the government won't be able to do as much. So he really makes this like strategic endorsement of supply side when it comes to taxation. He doesn't. He's not a believer in going back to the gold standard and and to the extended that's part of supply side, he won't even have the conversation he the Austrians he doesn't like that either he's he's always in a running debate with other libertarians who want to go back to from the like 1940s on and he will never he that he really doesn't count and said all the way to Schwartz basically, you know, putting in the same kind of the nail in the coffin in the gold commission in 1982. He also believed he was fond of saying that the ultimate measure of the state was how much it spent. He seemed to believe that governments would not deficit spend. And he you know starting with Reagan at the very least seem to be way off on that. Yeah, I mean so the same place where he endorses supply side. There's another you know he's as well that the Reagan administration of course will be fiscally responsible. And then he argues deficits aren't bad, unless they're inflated away, and they won't do that and also the deficit won't get that bad because they'll be responsible so. So he's part of that shift to legitimating deficits and in part that's because he sort of hasn't seen anything yet he thinks the spending is going to be restrained.  Next question please. Could you talk a little bit about the impact that Friedman had on Asia and in particular his relationship with Hong Kong where I'm from. And is it true. This is what I heard this is reprated Hong Kong that our move away from free markets is what killed him that true. Great. That's a conspiracy theory I could do something with I'm pretty sure that he died of natural causes at 94. So he did he he admired and was really interested in Hong Kong is kind of a laboratory of capitalism. He was very optimistic on China he went several I think he went in the 50s he went in the 70s he went in the 80s. And when he saw Tiananmen Square he thought this is the beginning of the end. This is that Chinese regime of the Chinese regime that the Chinese regime has liberalized its economy and eventually the dominoes will fall and it will have to liberalize its society so he said eventually there'll be more And again he has this great object lesson in Chile because in 1980 Chile is a plebiscite to go back to democracy and a transition to democracy around 1989 so he's seen an example of it he thinks it will work. And yeah he was not right about that yet. And in general when he started looking more at Asian economic development in the later part of his life. That's when he started talking about so he's always talked about political freedom economic freedom he starts talking about civic freedom. And I think this is inspired by Singapore maybe some degree Hong Kong this idea that you could meet you could have meetings maybe even a little bit of a protest but you didn't have democratic choice and that to him was civic freedom And so he was trying to find he was trying to identify another type of regime in which wasn't there wasn't like a secret police or a repressive state apparatus. But you didn't have democratic choice you had limited freedoms and you had economic freedom he's kind of trying to figure out how that all fit together. But again he's made a couple trips to these countries and he's trying to kind of fit them in his schema he didn't have any particularly deep knowledge of that region of the world. Next question. Yes so I think as successful as Friedman was in an academic context writing all the journal articles writing coming up with his theory of inflation history of monetary history in the United States. I think what sets him apart in a lot of ways is his ability to communicate these ideas to a broader audience to people who are less economically literate things like capitalism and freedom or free to choose the TV series right. So what made him so unique in his ability to do this and what are some of the lessons we can learn today when trying to communicate some of those same ideas. Excellent question my one word answer is rose. So find it find a good a good partner but I do I say that in just but the the books of his so for a monetary history really transcended just economics and also so did free to choose and Capitalism and freedom they had they both had they all had women co-authors and I think what that did was it wouldn't necessarily have to happen because they were women but they had a different intellectual orientation so shorts was more of a historian interested in narrative kind of grounding these really abstract ideas in stories that people could relate to. And likewise rose would help him work out his newsweek columns and then she would kind of prime him off stage before he got in front of the camera and talk so I think he he wasn't just an economist and he wasn't just immersed in other people who were they were intellectual skills so I think it's something about that and I also do think like history and narrative and story are just really this how humans communicate and share ideas and those can't be forgotten. It's really fascinating the discussion of how he how we worked on free to choose where he he had some notes but you know like Jackie Gleason he didn't like to rehearse, but but rose would kind of put him through his paces. Yeah, I'm warmed up a little bit and she did that with his newsweek. Yeah, and apparently he really wasn't sure about doing the newsweek column he's busy right and so apparently she and David like tag teamed him for like 48 hours and we're like you got to do this. So he had he had a support team I mean that's another big lesson is one reason he achieved so much is that he had a lot of other people helping him intellectually behind the scenes. And then he also plugged into all these networks you know which I describe in the book we haven't really touched on here but he had lifelong friends that were also committed to the same causes as he was so. And he was pretty generous and you know he didn't pretend that he was a universal genius work. Yeah he was like the anti Rand in that he he gave a lot of credit to other yes compared to Rand he was quite generous yeah. The most scathing indictment of a human say right but okay. Just before my question I needed to point out that freedmen did in multiple places advocate for abolishing the Federal Reserve and even in 1984 he writes a paper where he sketches a proposal for phasing out the Federal Reserve and allowing free banking to take its place so he did. You can go that far at some point in his career later part. My question is that throughout his career he advocated for the idea especially in the late 70s and onward of a constitutional amendment to limit total government spending and it even went somewhere in the 1980s when the Reagan administration Republicans tried to get it passed in Congress. So could you talk about his efforts there to. Yeah for sure. Yeah and just on the on the first point is interesting in the beginning when he would appear before Congress. He would still tout 100% money. You know this is in the early 60s and then eventually over time he's like well you should have a monetary growth rule you know and so I think he kind of realized if you show up to Congress and say rip up your banking system root and branch. No one's going to listen to you but if you say well here's my kind of technical tweak then you then you get somewhere. So the second part of the question was about sorry refresh my memory about the constitutional amendment to limit overall government expenditure. I mean I think this is where he this is what he took from public choice theory and whether it was an actual Constitution or just another kind of rules based framework so such as many states passed which would either be like a balanced budget amendment or a super majority for a tax raise or setting like capping property taxes. That was very promising to him because it goes back to rules over discretion you set up a new rule and a structure. And then the politician can't change it or it's more difficult for them to change it so instead of kind of lobbying and being trying to influence the decision makers you kind of changed the setting in which decisions are made. So I would say he he was involved in the state level organizations it's actually what he was doing when he won the Nobel Prize. I think he was in Michigan and the Michigan organizers really had Freeman out and they're like God this is going so great like look at all the media here like our cause is really great and then they're like oh Freeman won the Nobel Prize. That's why they're all here so that was very important to him for sure. Next question. This was alluded to a bit earlier a couple of times but to how well did Hayek and the distinctly anti-positivist Austrians get along with the monitor school Friedman and the entire Chicago school. Yeah I think there was a lot of mutual suspicion but also a lot of effort to kind of bury the hatchet. So you know Hayek is really pushing back while he's at Chicago and it's hard because while they're together and interacting the most you don't have the most you can't really see into that relationship but Hayek thought any type of monetary growth rule was inflation simply put. So he's very suspicious of that. And so he's kind of you know he's kind of always at them as they kind of reformulating monitorism in the 1950s. Then later you know he's really emerging as the trying to be the opposite of Friedman in terms of like in Britain we should do more of a shock treatment versus gradualism. So I think there's tension there and I think Hayek regretted maybe not. There's a couple of places where he's like I wish I had like discredited Friedman or I wish I had pushed back against Friedman more but at the same time they do perceive themselves as being in some sort of alliance. And so they're better than some other political movements at kind of keeping those disagreements more quiet rather than. They're both very I mean very clearly and broadly liberal in 19th and early 20th century sense. Yeah. So they're they're on the same side pushing back against things like central planning and all of that kind of stuff. And I think yeah but the money is a point of difference like how they would manage whether it's the gold standard or banking or free banking. We never quite come together on that. But again you know Hayek Hayek goes through many different stages. You have to kind of figure out which Hayek is the one we're we're talking about. I like Selma Hayek. Now and there is a real distinction between the positivism and the kind of Austrian understanding which really approximates most modernism. We won't go into that. Thank you. Next and final question. It seems like similar to Chile a lot of students from Chicago came to Brazil to lead part of the monetary revolution combating hyperinflation. But from what I understand it seemed like Friedman was not very big fan of the planet itself. And it felt like he wasn't going far enough because there was still a big fiscal deficit in Brazil. And I guess from what I understood his position on the IMF saw that IMF was subsidizing a lot of the fiscal deficits around the globe including Brazil. So I was just wondering what was your if you could give us any more color on his position on the IMF and his involvement or his students involvement in the monetary revolution in Brazil. Yeah, that's a great question. I wish I could say more about Brazil, but I cannot. But I do know that he and George Schultz called for the abolition of IMF and the World Bank. And for this reason that you sort of mentioned they thought it created these moral hazard or kind of perverse incentives that was easy to spend other people's money and that they basically had kind of juice the development process beyond what it could sustain. And they also so this this became for Friedman sort of emblematic of how when I talked about his belief that the dynamic of government is growth that once an organization or a bureaucracy is created it just finds a way to sustain itself and he saw these as created during the time of Bretton Woods to kind of sustain the Bretton Woods monetary system. And then Bretton Woods ended and they kind of reinvented themselves this sort of global development agencies and he thought this was really problematic and they should just be. They should just be abolished so he and George Schultz. So they had the kind of like a bunch of co authored a couple op eds didn't really go anywhere but it's interesting because it has this sort of echo with the anti WTO movements you know so you have that kind of left left right synergy horseshoe a good. Yeah, yeah, potential horseshoe and he was friendly with Schultz they were both on the faculty at Chicago. And that's a relationship I talk about when the relationship with Arthur Burns collapses. He and George Schultz become extremely close and that's one of the ways freeman proved so influential and the Nixon administration is through the kind of the evolution of Bretton Woods or the last days of Bretton Woods and really Schultz is kind of his man on the inside. Do you think that Milton freeman would have invested or lent his credibility to Theron house. Like Joe Schultz.  You know, actually, I apparently I don't I did not find they did not put their like balance sheet in the archive so I don't know and that's really rose right I mean she talked. She was paying all the bills right she was writing all the checks. I mean they ended up having a pretty nice life so I think they made some good investments but they also got in early and just stayed in and it was the American century you know I guess as a final question. What do you think a freeman would have made of Javier Malay in Argentina. I think named one of his clone dogs after Milton freeman. Yeah, I think he'd be really, really excited. I mean I think he would so I ran would not be able to set aside the parts of Malay that are more socially conservative. And I think freeman might notice the populism but I think would focus more on the idea that this is a really straightforward cure for the ills that Argentina has been suffering for, you know, for so long. And so I think he would say, if he does it right, it's going to have a trajectory like Chile, you know, in terms of developing a really strong economy. I think he'd be very excited and I think, yeah, I mean Malay sounds like he's in a Chicago economic seminar when he lays out, you know, his ideas. So I think he'd be thrilled. Yeah, Robert Lucas is one of his dogs as well. I think it's like it might be Mises Rothbard and Lucas. I heard Rothbard, Mises, Freeman and Lucas. I don't know about, yeah, Freeman and Lucas a little different. I always thought that libertarians like cats more than dogs but I guess not right. I want to thank Jennifer Burns for talking to Reason. The book is Milton Friedman, The Last Conservative. Thank you so much for talking. Thanks for having me. Thanks for coming out.