|0:27||Intro. How did your intellectual journey get started? Originally radical. Grad student at UCLA. Armen Alchian would not let him get away with nonsensical statements, like support of minimum wages without thinking about the effects as opposed to the intentions. Axel Leijonhufvud, Harold Demsetz. Essay contest. Jack Hirschleifer: "Walter, you should be apprehensious!" Flunked exam at first, subsequently passed. What was Alchian's class like? Very disorganized, used to pick on Williams. Question posed each week, which he'd then prove as wrong. "Why do current generations build things that will long outlast their lives" (e.g., Brooklyn Bridge)? Williams: In order to build a bridge like that you must need a lot of resources. Alchian: No--during WWII we built bridges with much less. Eventually Alchian pointed out that he had no satisfactory answers for these class questions. Good pedagogical technique.|
|9:00||What did you think you'd become as an economist? How did you get into writing for the public? James Buchanan, Harold Hochman, Urban Institute, Washington, D.C. Became interested in writing for the intelligent layman. Temple U. Al Morris, Philadelphia Tribune, asked him if he'd write a weekly column on applied economics. Syndication. Alchian's continued influence: "You know, Walter, the true test of whether anyone understands his subject is when he can explain it to someone who doesn't know a damned thing about it." Williams now delights in doing this. Williams illustrating Type I, Type II errors, using himself and his wife as examples to Alchian. Wife maximizes number of friends but that maximizes chance of being hurt. Walter by contrast minimizes number of friends which also minimizes possibility of hurt. (Alchian's comeback: "Walter, have you considered a third alternative? Have you considered that people might not give a damn about you one way or the other?") Benefit to writing a syndicated column: get a lot of mail, which makes you more informed. Gas gouging example after Hurricane Katrina: Appalachian opportunity for oil production with higher price. Plenty of junk: people would never complain about the law of gravity, but they gripe all the time about the law of demand.|
|20:05||What topics that you write on engender the most controversy? Agricultural subsidies, Social Security. Radical view of the Civil War and the right of secession: If States did not feel that they had the right to secede, then the Constitution would never have been ratified. Later, New England States, dissatisfied with the Louisiana Purchase, actually initiated secession discussions. U.S. War Between the States was about the right of principles to fire their agents, not over slavery or over two sides trying to take over the government. Deciding that States cannot secede means that the Federal Government can do whatever it wants to the States. Unintended benefit--freeing the slaves--came at most brutal cost. Slavery was already withering away. Frederick Douglass. Fogel and Engerman, Time on the Cross. Actual language of the Emancipation Proclamation: Lincoln freed the slaves only in those States that are in rebellion against the Union. Sec. of State or Treasury chastised Lincoln "We freed slaves where we cannot free them, and failed to free them where we can."|
|30:55||Agricultural subsidies. American romance with back to nature, farming, but in reality farm subsidies go to the wealthy, and often farmers are paid to not do anything. Hayek's answer to "If you could pass one law, what would it be" was "I would enact a law that if Congress does anything for one American, it must do it for all Americans." So if Congress paid one American to not raise pigs, it should pay all Americans for not raising pigs. There would end up being no pig subsidy at all. Walter: "So, if you give one American the right to keep out foreign imports, you should give every American that right--even economists!" Hayek was gentle, kind, like Friedman--avuncular. Edward Teller, Stanford's linear accelerator, particle proliferation.|
|36:28||What Russ has learned from Walter. Paraphrases:|
- "I don't tell my grocery when I'm coming. I don't tell the grocery what I want to buy. I don't tell 'em how much I'm going to buy. But if they don't have what I want to buy when I get there I fire 'em." If market-clearing were perfect, there would be nothing on the shelves when we got there. Simple explanation: We're happy to pay a small premium for buffer stocks at groceries. Conserves information and planning time.
- Through most of human history you got rich by plunder. Only recently you get rich by serving your fellow man. Bill Gates, Windows. Those who criticize are really disagreeing with an outcome that was the result of voluntary decisions by millions of people. Those who become wealthy through the market make it possible for those who are not wealthy to have things that previously only the wealthy could afford. Vacuum cleaners, entertainment in one's home, microwaves, cell phones. 60% of those defined as poor by the Census Bureau own a car, 80% have air conditioners. Where do you really want to be born? Cuba, Korea: guards all face one direction.
|46:52||Morality of capitalism: Walter: "If you want to get potatoes from Idaho to NYC, would you want the farmer to be motivated by love for you or love for himself?" What human motivation gets the most wonderful things done? "If you ask me, I'd say greed." Not robbing, but trying to get more for themselves. Cattle farmers get up in the dead of winter, make great personal sacrifice, and result is New Yorkers have meat. If New Yorkers had to depend only on those who loved them, they might have nothing to eat! Adam Smith's Inquiry into the Nature and Causes of the Wealth of Nations, baker, candlestick maker example: self-interest. Public good is promoted best by private interest. "Greed" is catchier word than "enlightened self-interest."|
|51:43||George Mason U. economics department emphasizes applying economics to real world. Williams's role while Chairman. Tom Sowell remarked that it was probably Williams's turn. Between Buchanan's winning of Nobel Prize and Williams's Chairmanship, GMU had drastically cut size of economics faculty by refusing to fill positions. Williams decided that the only way to improve the department was to privatize it. Nasty fight, standing up to the administration, raising money. Hired Vernon Smith who won the Nobel Prize the next year. Why aren't more economists interested in teaching economics to those outside the profession? We impress each other with mathematical models. Frank Knight: If the research is any good, get rid of the math and keep the English; if it's bad, keep the math and get rid of the English. Continued outcries about outsourcing, trade deficits suggest that economists are not doing their job to educate the public about bad public policies. Still, politicians have to be more clever today to act on their agendas because of the efforts of economists to educate the public. Big government wasn't always part of our history. William Jennings Bryan's "Cross of Gold speech", promoting government interference with private decisions, was not successful. Paul Samuelson even bought into central planning, but no one says that today.|