Nicholas Wapshott on Samuelson and Friedman
Aug 16 2021

Samuelson-Friedman-195x300.jpg Journalist and author Nicholas Wapshott talks about his book Samuelson Friedman with EconTalk host Russ Roberts. Milton Friedman and Paul Samuelson were two of the most influential economists of the last century. They competed for professional acclaim and had very different policy visions. The conversation includes their differences over the work of Keynes, their rivalry in their columns at Newsweek, and a discussion of their intellectual and policy legacies.

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Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.

READER COMMENTS

Brett Ferrell
Aug 17 2021 at 2:17pm

Thank you for the love letter or sorts for “uncle Milty” as I call him.  Clearly I did not know the great man, but he is a bit of an idol to me.  I grew up on his Free to Choose program and his Donahue appearances and fell in love with his ideas, and his way of expressing them.  It is like visiting my youth to hear someone who was a peer remember him, and his ideas.  I think I’ll go re-listen to his EconTalk appearances.

Brett

Peter E
Aug 20 2021 at 10:41pm

At 62:00 you assert that Trump represents the public turning its back on Friedman, “especially trade”.

Trump always said he is in favour of free trade: it’s just that the specific NAFTA deal was bad. Five years ago, it was reasonable to speculate that Trump was lying. But now, after the threat to “tear up NAFTA” turned into a renegotiation of NAFTA, I don’t see how you justify a claim that Trump was anti-trade, much less a claim that the American people have turned against it.

Granted, Trump repudiated Friedman’s famous boast that free trade is great, even if the other side doesn’t reciprocate. Then again, I don’t think the public was ever on board with Friedman on one-way free trade.

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AUDIO TRANSCRIPT
TimePodcast Episode Highlights
0:37

Intro. [Recording date: July 27, 2021.]

Russ Roberts: Today is July 27th 2021, and my guest is journalist and author Nicholas Wapshott. His latest book is Samuelson Friedman: The Battle Over the Free Market. He was last here in October of 2011 discussing his book Keynes Hayek.

I want to thank Plantronics for providing today's guest with the Blackwire 5220 Headset.

Nicholas, welcome back to EconTalk.

Nicholas Wapshott: You've come back [? inaudible 00:01:00] to hear us, Russ. Always good to talk to you.

1:03

Russ Roberts: Let's start with what these two men, Paul Samuelson and Milton Friedman, had in common.

Nicholas Wapshott: Yes. It's extraordinary. Although they were the greatest rivals on earth, it was as if they were twins separated at birth. They were within a couple of years of each other. They both had very similar backgrounds. They were both Jewish but neither of them practiced Judaism in a serious way as they grew up. But, that civilized bubble surrounded them always. They understood each other intimately. They went to the same university. Samuelson was a precocious child, and although he was two years younger than Milton, he was in the same year as Milton. So, they literally shared the same class. And, they headed off into the great world together, with both--you'd imagine, identical views of the world. But in fact they had very sharply different views of the world. One turned left, one turned right.

Russ Roberts: How did they get along? And, of course, talk about how they were in the public eye? Each were alternating weekly columns at Newsweek for a long time. How did they get along in person? How did they get along in print? And, I'm curious--how much--did you read all of their columns?

Nicholas Wapshott: Eighteen years' worth of columns, yes I did.

Russ Roberts: Okay, go ahead.

Nicholas Wapshott: A lot of it, of course, totally irrelevant by today, because you can't really work out what was going on at any time. A weekly column is not enough time, really. They're not writing the first draft of history. They're just shoveling the stuff out the door.

They got on with each other pretty well, considering that they had very different views of the world. They were rather envious of each other in many respects. Certainly Milton always thought that Paul Samuelson had had it rather easy. That's really because he won scholarship, after scholarship, after scholarship; and Milton took a rather longer route to get to much the same place. I think that Milton was also envious of Samuelson's easy air with established society. Milton was an outsider always: He liked to be an outsider. That suited him.

Russ Roberts: Yes, he was. Yeah, I agree.

Nicholas Wapshott: That was orginally [crosstalk 00:03:18] for Milton, and he enjoyed that. Rose Friedman, Milton's energetic wife, constantly carping at Samuelson for living too high on the hog, and that poor Milton had to put up with, you know, only a second home in Vermont, and so on.

They both did amazingly well. They both won Nobel Prizes. Yes, they got on very well in person. On the page, they were rather cooler towards each other--as one might expect because they were representing their different tribes, if you like. There's no doubt there was an intense personal rivalry, however friendly they were. And, even years after--years after Milton's death--Paul Samuelson was still kicking his corpse. He could not resist giving another little jab.

Russ Roberts: We'll come back to that. I was going to remark on that. It's true.

Nicholas Wapshott: When Milton died, there's a sweet letter written by Samuelson to Rose saying, 'I lost a wife, and you'll find that Milton will always be with you. He'll be there. So, don't worry about that, he's still with us and he's still looking over my shoulder, too.'

So, there's a great warmth, actually, beyond the obvious rather steely rivalry. There's no doubt this was fist fighting, this was every bit as much as Keynes/Hayek fought each other, and then they became close friends, of course. These guys were close friends; but they always maintained civil relationships with each other. There was never any outright slanging. On the other hand, their personal letters were very often vituperative--very often sarcastic, very often unforgiving, I think.

Russ Roberts: You have a lot of examples from both men of correspondence where they treated each other with respect. I think regardless of the differences in their ideologies and perspectives on economics, there was certainly, at a minimum, a grudging respect--because of the success of both in the field they both share.

Nicholas Wapshott: Absolutely. Hugely prominent. Now talking about numbers one and two, could argue who was the more influential and who was more important. But, in their lifetime, they would both admit that each other was the most important rival outside of their world.

Russ Roberts: Yeah, or at least living rival. I'm sure they also considered their place in history.

Nicholas Wapshott: And, interestingly, actually, they both professed to be Keynesians in the end. It's quite interesting.

Russ Roberts: Sort of--

Nicholas Wapshott: Sort of--

Russ Roberts: I mean, we'll come back to Milton's--

Nicholas Wapshott: Well, what Hayek said was that they were both Keynesians and they were closer to each other than he was to either of them.

Russ Roberts: That's sort of true. I think that's more methodological. I think Milton often staked out Keynesian ground because he wanted to fight on his opponent's home turf--

Nicholas Wapshott: He was very happy to do that--

Russ Roberts: And, he felt he could be more effective if he couched his work--his intellectual work, not his political/philosophical work--but his intellectual work, I think he tried very much to beat Keynes at his own game. Hayek did also, of course, and he, I think failed; whereas I think Milton had a much better success rate. So, as much as I like Hayek, I think there might be a personal thing in that remark.

6:48

Russ Roberts: But, let's talk about their intellectual legacies. I'll start with Samuelson. How would you summarize Samuelson's contributions?

Nicholas Wapshott: I think he set out to, in a way, complete what Keynes had left behind. Keynes died prematurely and left a lot of questions unanswered. And, for Paul Samuelson, it was a matter of completing the work, filling all the gaps in. And, laboriously, he wrote paper after paper, after paper, learned journals, papers. He filled in every single aspect, worked it all out mathematically, in order to show exactly why these bits and pieces for the economy worked. And, it was endless. For him it was like coloring in a coloring book. He had to finish the whole portrait so that it was left behind.

And, he found himself defending--he thought himself as the High Priest, I think, of Keynesianism. He disguised it by saying that actually he'd found a synthesis which combined the best of Hayek and the best of Keynes, or the best of conservative and liberal economics together. But, I don't think--in his own mind he was the inheritor of Keynes's legacy and his chief proponent. And, no doubt from his writing of the key textbook which all of us undergraduates read, simply called Economics by the Paul Samuelson--one of the best selling textbooks of all time, written and published, still being published and still being revised, roughly in today's money, $150 bucks a throw--he became a very rich man very, very early in promulgating Keynes's legacy.

The opposite was true of Milton. I think Milton in his mind--well, he deliberately set out to expose what he thought were the flaws in Keynes's thinking, and to this end he would do anything. Including, very interesting sojourns he spent in Cambridge, England, hanging out with the old Keynesians, the old Kitchen Cabinet that Keynes had brought together, and argue with them one by one. They became friends--and corresponding friends, too--in the Hoover Archive which is where all Milton's work are to be found. You'll find all sorts of Keynesians, most unlikely people writing in a very friendly way to Milton. Because there was, there's no doubt, he could be amazingly irritating, but he was an amazing, charming man.

Russ Roberts: Yes, he was.

Nicholas Wapshott: He was seductive. And, I don't think that Paul Samuelson quite had that. He had an easy sort of patrician air, Samuelson; but he didn't have what Milton had, which was an urgency. A sense that something important has to be decided while we're talking. The present moment we're talking, arguing, is the most important of them all. Samuelson took a much longer, loftier view, which rather [crosstalk 00:09:37].

Russ Roberts: The only thing I would add to your summary of Samuelson is: It's true he was a Keynesian, certainly in the area of macroeconomics. But his contributions to microeconomic theory, which was not Keynes's bailiwick at all, were really pathbreaking in the field. It's not my cup of tea--as listeners will not be surprised to hear--but his 1948 book Foundations of Economic Analysis is really the crossroads of the profession where it turned toward the application of mathematics to human behavior in a way that hadn't been done in that way before. He was a very young man. It's an incredibly impressive achievement.

And, so, in that sense, I think he had a much bigger impact on academic economics than Milton did. Milton's work that was influential academically was his attack on the Keynesian foundations, really, in macroeconomics. And, we'll talk about that. The other thing I want to--

Nicholas Wapshott: [crosstalk 00:10:45], sorry.

Russ Roberts: Go ahead.

Nicholas Wapshott: The other thing is that I think Milton had a much grander ambition, really. Paul Samuelson was in economics: he was economics, his world was economics.

Milton started off in economics, but he worked out that in order to tell the tale that he wanted to tell he needed to broaden out his appeal. He needed to become popular, and he also needed to make it a political movement more than an economic movement. And, I think that when it comes to, for instance, his libertarian ideas, which have become much more mainstream than they ever were when he was alive, he has transformed-- well, I think, say the Republican Party is now every bit as much a libertarian party as it is a conservative party. And, that's [crosstalk 00:11:27].

Russ Roberts: That claim, which runs through your book, I disagree with.

Nicholas Wapshott: Oh, do you?

Russ Roberts: And, was shocked to read it.

We'll talk about it.

11:36

Russ Roberts: But, I do think you're right, that he distinctively had a vision--in a way, was one of the earliest public intellectuals from the academy. Right? There were a lot of public intellectuals. Galbraith was also in this era: you reference him a few times. But he wasn't in the--he had an appointment at Harvard, but he wasn't the academic influence that a Samuelson or a Friedman were. And, Friedman's goal clearly was to take his academic credentials and leverage those to have an impact on the public--and on policy. And on policy.

Nicholas Wapshott: Yes. Yes.

Russ Roberts: Before we get to these issues of politics, one of the parts I loved about your book is that Samuelson was forced to acknowledge the state of economics with some honesty regularly, because he had a bestselling textbook.

And, one of the things I really love about your book is that you periodically take a look at how Milton is percolating into the textbook.

So, that's a fascinating window. It's like a case study, essentially, looking at those successive editions of Samuelson's book Economics--which I did also learn from as an undergraduate. I also learned--I actually studied it in high school, even. I remember very vividly reading a chapter of it at the suggestion of one of my teachers.

And, but, because of that, Samuelson had to publicly state at least some version of what he thought where the profession was in our understanding of the economy. So, talk about how you did that and what that was. Obviously, that's not the essence of the book: it's just a little side thing, and it's lovely.

Nicholas Wapshott: From a writer's point of view, there were two things which were for me, for me, amazingly valuable.

First of all, these 18 years where they would play intellectual tennis, thwacking the ball across the net, and back, and back, and back--which was fascinating to watch. They didn't talk to each other. They spoke through the readers, if you like. They addressed the readers. Which is, for a popular author like me--or a semi-popular author--it's very important to see how they expressed themselves to a general public, which was good.

And, then, you're quite right that the fact that Samuelson was obliged to--and he was honest enough--to have to write what he believed to be the true state of affairs.

There might have been a little lag. He wasn't the leading indicator in terms of reporting Friedman's work. But, at the same time, when he came to the first edition of Economics, I don't think Friedman is mentioned at all. Or, he's mentioned in passing in a footnote. As is Hayek. Just as if they didn't exist.

But, as time went on, he had to acknowledge that they had become a force, and that they had to be tackled. They had to be reasoned with. They had to be addressed.

And, he gave them, actually, enormous credit.

Both of them were intellectually honest, which I think is interesting. And it's very important for all academics to be intellectually honest.

Neither of them, although they were both very political in their ways, they weren't pushed around by politicians. They weren't pushed around by current politics. They had a much larger aim, which was based upon finding The Truth--which for an academic is really the key thing. So, many academics, I think--

Russ Roberts: Well, it should be--

Nicholas Wapshott: drift away. So, many academics get into other businesses.

Russ Roberts: Yeah. Yeah. No, and I've mentioned many times on this program that in--the column started what year, do you remember, the two of them?

Nicholas Wapshott: Uohh--yeah. Whenever that say, when did the sale[?] take places? Jack Kennedy was [crosstalk 00:15:23].

Russ Roberts: I'm trying to remember. Early 1960s.

Nicholas Wapshott: Yeah, 1962, 1963. Jack Kennedy was just alive, just.

Russ Roberts: The crazy thing about it is that in those years there were three famous economists, really. Three and a half. Right? You had Friedman and Samuelson, because they were in a national news magazine, Newsweek every other week. You had Galbraith--his books were popular. And, after that you kind of had Keynes and Adam Smith, they were gone around then--Smith long before, of course.

But, that was it. In other words, it's not like today where, because of blogging and the Internet, and podcasts, and Medium, and Substack, there are dozens of economists. They're not all wildly famous. But, the opportunity to have a platform is so different. And, in those days, they were kind of it.

Nicholas Wapshott: Yes, it's true. One of the things I was surprised about--I was expecting to have to deal with Galbraith at some length, but actually as history has moved on, Galbraith has been washed up. Of course, he was always rather secretly despised by economists because he really wasn't an economist--he was an agricultural economist, whatever that is. And, he was also Canadian. So, he was sort of not quite right. You know--there's something not--I used to hang out with him at the Kennedy School at Harvard, and there's nothing nicer. The man, his legs--it was like being with a spider, his big long legs and arms and everything. And he was very generous and helpful in a biography I wrote about Margaret Thatcher, where he gave me absolutely crisp and wonderful quotes about how her economic policies made no sense at all. We had tea at the Ritz. So, he was a very nice person to hangout with, but in terms of permanent influence, Galbraith is gone. Nobody reads Galbraith today.

Russ Roberts: Yeah; and I think the lack of respect among the tribe of economists was that he never pretended to try to play the jargon and equation game that other colleagues did. And, so, he was looked down on, I think. Fairly or not, but that is, I think, accurate.

Nicholas Wapshott: He also had--Galbraith had--a very high opinion of himself, which is why he didn't become the Keynesian fighting with Friedman in Newsweek. If he'd been smarter about it he would have realized that that was the way to maintain his reputation, but instead he was too crammed.

17:45

Russ Roberts: Yeah. Well, it's interesting to me that both of those men, Samuelson and Friedman, took the job. And, you write at some length about their back and forth, and they were wavering about it as first, not sure whether it was a good idea. There is something tawdry, I think, in academic circles--particularly then, less so now but particularly then--that you would try to popularize your ideas. That was seen as sort of beneath a really first-rate scholar.

Nicholas Wapshott: It's true. It's true.

That certainly came out of Britain. Oxford and Cambridge were always very intellectually snobbish. They didn't like anyone who hadn't been to Oxford or Cambridge, for a start--which cuts most of us out. So, Samuelson sort of played that game, though he was, of course, a reject from Harvard. The work that you were talking about, Foundations of Economic Analysis, started off as his Ph.D. thesis, which stunned his supervisors who realized that he was way beyond them. They looked at each other and then said, 'I guess he's right; it seems plausible to me.'

Russ Roberts: He was a wunderkind.

Nicholas Wapshott: Yeah. But, you would think that Harvard would grab him with both hands. This is the way that Harvard's changed, I suppose, if it has changed. Because he was Jewish and because there was an antisemitic Head of the Economics Department, he wasn't offered a full lectureship, which is why he walked across the Charles River and became the key star at MIT [Massachusetts Institute of Technology], when MIT was just an engineering school. He transformed MIT. There's no doubt about it. They should [inaudible 00:19:16] have a statue of him at the entrance hall of MIT. I mean, they know his importance, but it just shows how foolish academic worlds are, because they have their own logic and it doesn't really fit reality.

Russ Roberts: Most everyone would put MIT in the top five academic departments, economics departments in the world. It wasn't then. It was a bold, actually quite risky move at the time. I'm sure he was uneasy about it.

Nicholas Wapshott: And, he wrote his economics textbook, of course, for MIT, as an introduction to undergraduates. So, that's why it's pitched [crosstalk 00:19:52]--

Russ Roberts: Fascinating--

Nicholas Wapshott: absolutely, at sort of 18-year olds, which is when he would have written to 18-year olds, when you would have read it: that sort of popular aspect, which was to his great credit. Because it takes an intellect of some confidence, I think, to be able to simplify things and pertain their accuracy. And, take on the criticisms from [inaudible 00:20:11] saying, 'Of course you've missed out half the story.' Samuelson did, but at the same time he managed to maintain the true essence of his argument, because he knew it so well and back to front.

Russ Roberts: I never thought about it, but writing a textbook in those days was also seen as beneath a great scholar. So, he not only wrote a column in Newsweek, but he also wrote a textbook--an undergraduate textbook. Now, having written Foundations of Economic Analysis insulated him somewhat [crosstalk 00:20:37] charges.

Nicholas Wapshott: Which one [crosstalk 00:20:38] by the way. That alone was cited as his Nobel Prize-winning effort, which was done before he was age 21. Unbelievable.

Russ Roberts: Yeah. Probably the two most innovative Ph.D. theses in economics are probably that and Kenneth Arrow's work on the Impossibility Theorem, which is extraordinary.

21:02

Russ Roberts: But, anyway, let's--I want to talk about Friedman's legacy, which we'll divide it into two parts. Let's start with his academic work--which I think, I have to say, I think you underestimate, which I think is quite important. But, I think there's one thing I want to quibble with. And, then we'll talk about the political claims that we just mentioned earlier.

Now, Milton's contribution, you claim, to my surprise, that his work on monetary theory was an academic failure. Is that a fair assessment?

Nicholas Wapshott: Uhhh, I don't think that he convinced everybody that he had to convince for it to be a success.

Russ Roberts: So, explain; and then I'll push back.

Nicholas Wapshott: There's no doubt that the truth about the Quantity Theory of Money is self-evidently true.

I think that what he then did with it, which was to was to turn it--and a lot of it to do with being popular--was to simplify it, oversimplify it to the extent that it not only became the only reason to [?]: I think probably [?] didn't persuade it, mainstream economists. And to that extent, I think he failed.

Russ Roberts: And, you also argue--and I think this is just--that like many things Milton did, Milton would claim, 'This is the best solution; and then here's not bad that might be politically feasible.'

So, for example, some say he had the idea of the Negative Income Tax, which became the basis for the Earned Income Credit in United States, to some extent.

He didn't particularly like it, I don't think, but he said: 'The current welfare system is horrible, a crazy quilt of different programs. It would be better to have one, and this is the way it should work.'

So, I think he had an ideal of monetary policy, which was a fixed rate of growth of money. And, he didn't persuade anyone to actually implement that in a reliable way that they were public about. Which you write about at some length: that he was eager to find a politician who was willing to get on that horse.

But, I do think he revolutionized the role of the Federal Reserve and the national banks and the Central Banks of the world. Before he came along, first of all, no one believed that inflation was mainly a monetary phenomenon. And, no one believed in the importance of the Central Banks until--I mean, he created, in my view, and you can disagree--he created Paul Volcker, he created Alan Greenspan. He created Ben Bernanke and their counterparts around the world, because he pointed out, based on his 1962 study with Anna Schwartz of The Monetary History of the United States, I think I got the year right--that money was incredibly influential in effecting economic activity in the short run, but not so much in the long run, in which case it mainly affected the price level.

That Twitter summary I think was a radical idea that is overwhelmingly accepted by many economists today. And, certainly by policy makers. Do you agree?

Nicholas Wapshott: Yeah, I guess I do agree with that. And, until Milton, all Keynesians who ruled the ruled the roost, said that money didn't matter. And, he said, 'Excuse me, it matters most of all.'

And, that message didn't get through. And, he transformed, of course, what you're talking about--the Central Banks and the way they manipulated the economy, because he gave them their discretion back. Until then, everybody lived under the Keynesian Bretton Woods agreement where everybody was fixed. So, there was actually not too much for a central banker to do apart from just watch as Keynes's formula kept a very rigid structure.

It was very daring, I think, of Milton Friedman to encourage--he tried to encourage Nixon in the first place to do it, when he first went into the White House. And Nixon ignored him. But he was picked up later. And, the floating of exchange rates, I think has been a great liberating force for any dynamic economy. So, he released the excitements, urgency, and animal spirits, as Keynes would say--

Russ Roberts: Yeah--

Nicholas Wapshott: of an economy, by saying, you know, 'You live and die by your currency rate. Your own currency. Fix your own currency rate where you want it best.'

Which, I think looking back at Keynes, who conventionally a general theory in order to counter the fact that he believes that the pound sterling had been fixed at the wrong rate in 1918 with structural unemployment in the millions during the 1920s, when America was enjoying a boom, Britain was already in a Great Depression, which lasted a decade before we got to 1929.

And, I think that actually looking back on it, that Keynes would acknowledge that that was right, and that his own agreement that Bretton Woods, although it was was his solution, in a modern world where economies are moving fast and where technology is moving fast and businesses have to accommodate all this stuff, the more flexibility you have in an economy, the better, for those who try to manage, they're trying to write[?ride?] it.

26:03

Russ Roberts: Now you said, and I think you're right, that in some sense, Friedman unleashed the discretion of those Central Bankers--gave them an extra technical term as a degree of freedom because the exchange rates were floating, which was an idea he had put forward in Capitalism and Freedom.

But, the irony is, is that he wanted them not to have discretion. His preferred world was a slow but steady growth and some fundamental measure of money that would roughly mirror the productivity level of the economy ensure stable prices.

Now, I interviewed him in 2006. We'll put a link up to that interview. You know, he believed that Central Bankers talked about their job differently than how they actually did their job. He felt pretty good about what they did.

But, the point I want to emphasize is that he wanted to take discretion away from the Central Bankers. He wanted them--and it's a very interesting--you know, John Taylor is the modern, I would say, promoter of this idea that--and he has a different rule than Milton's--but the Taylor Rule is an idea that says, you know, 'Central bankers should be a little bit more like an index fund than a stock-picking set of managers. They should try to constrain themselves.'

And, that's a rather dramatic change. Doesn't always happen, we can debate whether how much of impact that actually had. But I think it's clear that it was an important idea that had an impact.

Nicholas Wapshott: Yeah. There are two things there. First of all, that extraordinary work he did with Anna Schwartz, which was actually to look at the data, the big data, about how we got to the Great Depression. And, worked out that--and it was a Keynesian understanding that he brought to it, which was: Actually there should have been more money pumped in. Quite the opposite to the way that--Milton Friedman has always been associated with a restricted monetarism, where people are clamping down in order to cure inflation. But, what he said that the American economy should have done was: get the faucets open, get some money in that system. The banks won't go bust. Everybody would be--more people would be in jobs and it'll cure itself.

So, that was a different reasoning.

When it came to later on, I think his profound problem was, however right he was about the Quantity Theory of Money, he didn't find a persuasive way of telling practical people like Paul Volcker, this is how you do it. Because, they couldn't even agree on what bit of money you measured? Is it M3? Is M4? Is it M0? M1? Each Central Bank would choose a different measure. That, the British experience in monetary was all on M3. And, that was something which the American--Volcker wasn't looking at all. I think it was very difficult.

Also I think Central Bankers are under enormous pressure from their political masters to do something: 'For goodness sake, do something.' You know: 'I've got an election coming up any minute,' which is always true. There's another one just around the corner, 'Do something to help me. Would you please?'

And, I think you've got to get to--he doesn't get good credit for very much, but Jimmy Carter appointed Volcker to fix hyperinflation; and left him to it. He got no pressure. And, to the extent that Volcker is saying, 'I'm expecting the President to arrive any minute. You know, red-faced and ready to punch me on the nose; but he never did. He never mentioned it at all.'

Russ Roberts: Yeah, and he also appointed Alfred Kahn and began the process of deregulation that certainly Reagan continued, but it started in a very active way under Carter's administration.

So, turning to this question about measuring M2, M3, etc. You know, Milton--I think he was an M2 fit[?] late in his life, but I don't want to quote him on that. I did get--when he was in his 90s, he did send me a spreadsheet after I interviewed him. Which was really quite an extraordinary experience. You know, I'd interviewed him and I said, 'You know, you made this claim. I looked at the data, and I'm not so sure. I don't see it.' And, he wrote me back and he said, 'Oh, you're looking at the wrong measure.' And--I think it was M2--and he said, 'If you look at M2 you'll see it. It's exactly what they're doing.' It's a beautiful thing. I hope I'm that intellectually alive in my 90s. I hope I make it to my 90s.

30:10

Russ Roberts: Let's turn to the--actually, I want to say something else about the connection between academic work and policy work. Friedman, in many ways, won the middle round, you could argue, of the debate between the two of them when stagflation came along, which was a challenge in the late 1970s to the Keynesian models. Because, in the Keynesian models, if you have high inflation, you should have low unemployment; if you have high unemployment, you should have low inflation. And, we had both high inflation and high unemployment. And this was a signal that the model had to be adjusted or thrown out, depending on your perspective.

Friedman himself said, by the way, that it wasn't the theory, The Monetary History of United States, that convinced people about the importance of money. It was New Zealand's experience with Don Brash, a Central Banker who clamped down on the money supply, and inflation ended and disappeared; and people went, 'Oh, I guess that's how it works.'

So, it's fascinating to me to think about while they're having this academic debate about theories, the real world is imposing its lessons on both of them at various times. Sometimes in the favor of one. So, it has the favor of the other. Some of Milton's predictions were disastrously wrong as well, in the 1980s--predicting inflation that didn't happen. Would you talk about that and your thoughts on that?

Nicholas Wapshott: Yeah. Milton was a practical man, so he was eager to get involved in politics; and he was the economic brain behind Barry Goldwater, for instance. So, he was very early in that rise of--the rebirth of the Conservative Movement, which blossomed in Reagan and Thatcher's time. And, that's a practicality, then. So, I think that he was obliged to try to work out how his immensely complex understanding of what reality was, could be translated in a simplified form enough to be useful to anybody. And, I think he struggled with that.

What he spotted though, which was exactly the Phillips Curve--I think Phillips actually came from New Zealand in the first place--the trade-off between unemployment and inflation, that it didn't tally. It made no sense. Ned Phelps also spotted this and then in a separate way disproved the Phillips Curve.

And, that was the opportunity for Friedman to say, 'Well, this key part of Keynesianism isn't working. It needs therefore revising. And, I'm your man.'

And, it took Samuelson, I think, a long time to take that onboard. He was reluctant to admit that the great man has been wrong, that sort of thing. Although I think everybody admitted that Hicks, who transferred Keynes into a simple formula, had oversimplified in many respects. Hadn't taken time into account, for instance. There was always a snapshot where actually the ticker's moved.

33:11

Russ Roberts: So, let's talk about the policy and political side of both of them. Now, Samuelson wasn't nearly as politically connected or didn't long for it. You point out Milton did, and tried to advise a number of Republican candidates for President and actual Presidents, with, I think, very mixed results in terms of them listening. I don't think they listened so much.

The one exception to that might be the volunteer army, which is a shocking policy revolution that--Friedman wasn't the only one; there were others who were working alongside him. But, that was one idea that did catch on, which is surprising--I think probably surprised Milton: if he had to pick one idea that he thought would--and it wouldn't have been that one.

But, talk about--make your claim about Milton's influence on public policy and on the Republican Party, because I was surprised at that.

Nicholas Wapshott: Although he played for a conservative team, always--it was always a Republican President. There are some people who are more bought between--actually, be just as happy under a Democrat as under--like Volcker--just as happy under one regime as under the next, as long as he's alive to do what he needs to do.

But, Milton always, he was a fierce partisan; but at the same time he wasn't a conservative--like Hayek, who famously wrote, "Why I Am Not a Conservative." Friedman considered himself [?] deserved it. His notion of the relationship between an individual and the state was very important to him. And, he thought that the individual should be allowed as much self-expression as was possible. And, he didn't like anything that curtailed it at any stage.

Samuelson, maybe it's because he had achieved so much earlier in life and found himself very comfortable, in a world that he'd inherited from others, he thought this doesn't really need fixing. You know: If I did well in it, surely everything must be all right in the garden.

But, Milton Friedman had a different view of that. When it comes to--take an example of Milton's belief that recreational drugs--all drugs--should be free.

Russ Roberts: Legal. Legal.

Nicholas Wapshott: Legal. Yeah, exactly. Legal. Not curtailed. This includes, by the way, experimental drugs, in terms of medical experimentation, which also the FDA [Food and Drug Administration] gets itself into great trouble with, because it has to prove that the Alzheimer's drug works, for instance, which is probably untrue.

So, there's great pressure to approve drugs. But, I mean, 'Why should there be a gatekeeper on these things?' is what Milton felt.

And, the same thing--if somebody wants to sell cocaine, what's it to do with me? Certainly what's it to do with the White House? Nothing. They're going to do it anyway. So, don't put people on the wrong side of lawbreaking by that--now, well, the world has moved on. In a way, it's become Milton Friedman's world. The use of recreational drugs is now basically commonplace: States, one after the next. Chuck Schumer, for goodness sake, is in favor of legalizing marijuana. It was almost impossible to imagine even five years ago, the Clintons famously behind the curve, even though Clinton had, well, he said he hadn't smoked and he certainly 'chewed some edibles.' That's the truth of that. And, just like he sneaked around that lie.

So, the world has become as Milton--not wanted it to be, but he thought that it would be. He assumed that individuals would do as they liked, and that the state should just line up behind everyone else, including somebody's wives and mothers and so on, who tried to get people not to do, not to live the way they live.

So, yes, he failed in getting that to come about. But at the same time, he hit upon a truth, I think, which part of society has acknowledged. And, that is: Don't waste your time trying to stop people smoking a joint, because they do it anyway. They're going to do it anyway. And, it's a waste of time. And, arbitrary justice is a far more serious, and an injustice than it is the fact that the 16 year old might get a joint from this direction, rather than that direction. They're going to get one anyway.

Russ Roberts: Certainly in that sense, he was not a quote "conservative," at least the way most conservatives of his day were politically. He didn't like the term. He saw himself as a classical liberal--a term that's not in use much anymore, but he definitely saw himself as a Smithian, I would say.

Nicholas Wapshott: Yes.

37:42

Russ Roberts: But, you talk about his influence on the Republican Party, and you also claim--which, I was stunned--that he has, you blame him or connect him to the election of Donald Trump? I'm totally mystified by that. So, take a crack that.

Nicholas Wapshott: I talk about, first draft of history. This is very early in trying to understand what the hell Trump was about. But, Trump actually came out of--if[?] anything, he came out to the Tea Party movement. I think that the Trump supporters were Tea Party supporters in the first place. And, the Tea Party supporters were against the government trying to do things that they didn't want to do. They got fed up. 'The government does nothing for me. Why am I lending it support? I want somebody that understands me in the White House.' And, they said they didn't get it with George W. Bush, and even less so with George H. W. Bush, and so on.

To that extent, I think that it's become a[?] populist party in a way that Friedman, I think, was a populist in many respects. He was somebody--he was a populist waving the flag, saying, 'This way, lads.' Which of course isn't quite populism. But, you can see my problem here.

Russ Roberts: Yeah. That's a good line. I love that. No, I think he believed in individual choice. He believed, powerfully, that people should be free to choose what was best for them--his book famously called Free to Choose. At the same time, you're right. He did want to be a Pied Piper of sorts to have them follow a certain set of at least political or philosophical ideals.

But, I think--the reason I want to push back on those claims is--a couple of reasons. One is, he was remarkably unsuccessful in getting the policy innovations that he argued for in his two books, Capitalism and Freedom and Free To Choose. He got floating exchange rates. He got some limits to monetary expansion. He got a volunteer army. The rest--and there was page after page of getting rid of agricultural subsidies, getting rid of subsidies to Amtrak, a smaller government overall, freedom of choice for people in the areas of drugs and elsewhere--just a much smaller role for government. And, over his lifetime, government just grew steadily.

And, this idea that somehow we live in his world, or that the neo-liberal world that we, quote, "live in" is his creation--he would be shocked. He's not here to defend himself, but he certainly would say, and he did say to me, he said, 'You know, most of my ideas never bore out. People never tried them.' He wanted private social security. He wanted to get government out of retirement pensions. All those ideas: Nothing. No traction.

He put them on the intellectual table, which I think is not unimportant, but his influence on the Republican Party, to me, is nil. He changed their rhetoric, but they're not the party of small government. Donald Trump was an enormous spender. George Bush was an enormous spender. Even Ronald Reagan was a big spender. Yes, it was on defense, but more than it was on social welfare. But, I think Milton would say he failed terribly in his influence on the political process.

Nicholas Wapshott: Well, I think I'm maybe being half Brit. That my Thatcher experience probably tells a slightly different story. This is a country that in 1945, elected a wholesale socialist government, which transformed the pre-war administration into a proper working welfare state with single payer healthcare. We're talking about cradle-to-grave socialism: you know, 'We'll pay for your funeral, too.' They did. They did everything. And, they nationalized everything. Steel, coal, dosses[?]. I mean, there's nothing that they didn't see that they didn't want to own.

And, I think that Milton contributed towards the Thatcher Revolution, which came to the conclusion in the early 1970s onwards, that actually this was not the way to do it.

Even the Labour Party changed: it became a non-socialist party in that sense.

And, this is not to do with ownership. Ownership's not going to help you. Regulation, you can do things with, but ownership is not the key. Karl Marx was wrong. Lenin was wrong.

So, the freedom that the economy--first under Thatcher, but also individuals enjoyed it, as a result of the taking off of those constraints by the state--I think that there was probably a more profound, at least as long as it lasted, a revolution in thought.

And, Milton was, no doubt, behind that because Mrs. Thatcher not only praised him openly all the time, but actually when her Treasury Ministers didn't do what she wanted, she got Milton to come and lecture them. Which they were not very pleased about. Could you imagine in the Cabinet Room, it was Milton on one side of the table, and then there's a rather glum set of people including people like Nigel Lawson, who don't like to be told what to do.

And, then Margaret Thatcher leaves, saying, 'I'll just leave you to Milton. I'll be back in an hour.' And, they're going [inaudible 00:42:49]. Plucky Milton--[inaudible 00:42:52], by the way, in the lion's den.

Russ Roberts: Yeah. Well, he loved being there. Even though he was a diminutive person--physically he was--I think he was probably 5'4", maybe a little bit less. But, his intellect towered. So, he was never unconfident. Those kinds of settings.

Nicholas Wapshott: Well, yes. I mean, it's the classic short person, I guess. I don't want to get into paperback psychology here, but it didn't harm him, the fact that Paul Volcker was 6'5" or whatever he was, a good foot and a half below him. He had to stand on a chair to prod him in the chest.

Russ Roberts: It's true. It's true.

Nicholas Wapshott: Fantastic characters in this story, by the way. I don't know why--people say economics has to be a glum science. I've never found it so. It's full of amazingly untold spirited stories, you know. Great characters, great characters. Of which Milton, you've got to give it to him. I mean, he was all singing, all dancing. Wasn't he? At every moment of the day, and night: he was at it. He was a happy warrior, as we call them. Someone who actually got up every morning saying, 'Hey, what can I do today? How can I make the world a different place if not a better place today?'

Russ Roberts: And, he loved to spar. He loved to spar intellectually. He loved that back-and-forth that we were talking about.

It's interesting: he had--probably his best friend at Chicago was George Stigler, who has at least 6'5". I don't know if he sought out taller, to even emphasize it.

But, and I'm sure--and both of them, actually, both, say, Milton Friedman had an intellectual counterpart, a colleague who was less interested in public policy. For Samuelson, it was Robert Solow. And, for Friedman, it was George Stigler. George Stigler believed that trying to influence politicians is a waste of time. Lecturing them about truth was irrelevant. They responded to incentives and trying to tell them what they should do was foolish. You should just watch them like a circus for entertainment. And, to make observations on them. And similarly Solow. I don't know, about his views on policy per se, but he certainly was the academic's academic. And, both of them won Nobel prizes, also.

Nicholas Wapshott: Yeah. That's interesting. He--uh--of course, Friedrich Hayek strongly recommended to Milton, 'Don't mix with politicians. You'll waste a lot of time. You'll get heartbreak. They'll lead you up the garden path.' But, Milton thought that if you managed to get the decider on your side, that you could get things done. In that sense, he was very practical. He was a--well, by this time he has achieved fame, he's actually relatively old. He was sort of an old man in a hurry. But he still had things to do right up to the end of his life. I mean, it's no surprise that the day after he died, was his latest column in the Wall Street Journal. I mean, he was at it right to the end. And, I think he--well, looking back the experience--and he was disappointed by everybody.

First of all, he, too, enjoyed an intellectual snobbery. He would charge everybody purely by the measure of their intellect. And, that was to do with instinct and as he just worked it out. No new measures needed, no IQ [Intelligence Quotient] tests; but he spotted some like Nixon and said, 'I think probably the brightest man that's ever been in the White House.' And he was very, very keen on Nixon. And, then of course he was then profoundly disappointed that such an intelligent man should get things so wrong. Or, deliberately get things wrong, so cynically. That is he would--Nixon knew that you could not fix prices and wages. It's an impossible task: That, you can put whatever laws on you like, and people would find their way around it.

And, in any case, they make a marginal temporary difference to your prices and your wages. And, yet knowing this fact, he said, 'I'll do it anyway, because the public wants a government that looks as if it's trying to address these things. And, that's the way I understand it.' Fixed prices is what--in a bar, 'They just should fix the price.' But, yeah, but of no use.

Friedman, bless him, took him to task. He was quite happy, lectured the President of United States in the Oval Office, 'You're wrong. You're completely wrong.'

47:10

Russ Roberts: Yeah. One of my most--I have a photograph, I don't have it here because I've just moved to Israel and it's sitting in a warehouse in Maryland. But, I have a photograph of Milton talking to me after a presentation I made at the Mont Pelerin Society meetings. I've only been to one or two, but Milton happened to be at one of mine. And, it's--the reason I love the picture: He's talking, I'm listening.

Nicholas Wapshott: Heh, heh, heh, heh, heh.

Russ Roberts: That's appropriate. Yeah. As it should be. To play armchair psychologist for a minute, it's a fascinating observation that he was an old man in a hurry. I think so much of his youth was spent in the intellectual wilderness where no one respected him. He was seen as a buffoon, a crank. And, by the time his--he got the Nobel Prize in, I think, 1976--I think, if I have that right. He was born what, I think 1912? He was 64.

Nicholas Wapshott: 64 years old. Yeah.

Russ Roberts: Right. Friedman. Samuelson got the second one--Samuelson, back in 1960-something. So, he was an old man in a hurry. When he had the prestige and reputation that would allow him to influence the world, I think he wanted to grab it as intensely as possible. And, that's why I think he chased after many of those political influences.

Nicholas Wapshott: Yeah. There's no doubt he had a craving to be vindicated. He thought he was right all along. Why not? Many of us do. That's a great--

Russ Roberts: Yeah. That's a great insight. I think that's correct.

Nicholas Wapshott: And, Rose was always there to remind him. Whenever he wavered thinking, 'Oh, it doesn't really matter,' Rose said, 'Yes, it does matter. But, it does matter.' You know? It matters. Of course, it matters that Samuelson got the Nobel Prize first.

Russ Roberts: Yeah, that's true.

49:07

Russ Roberts: I want to read a quote that--I don't know remember when he said this. It was Samuelson talking about Friedman. He said--I found this so revealing of Samuelson--"Here was a libertarian immune to compromise, opposed to state power, skeptical of both politicians and bureaucrats, unmoved by good intentions." That's a very accurate summary of Friedman. Talk about that, Samuelson's assessment.

Nicholas Wapshott: Yeah. I mean, Milton Friedman was always aware of the disconnect between what people said they hoped to achieve by progressive acts, even including public broadcasting, and what the reality was.

So, with public broadcasting, for instance--let's take an example, but welfare, it's the same thing: You set out with a war on poverty, but you end up paying mostly black people to stay at home and doing nothing. Is that [?] what you had in mind? That can't be what you had in mind. That's not the curing poverty. That is institutionalizing property, and locking it down, and locking these people and their children forever into this terrible need for the state to give them a helping hand.

With public broadcasting it was: 'Yeah. Good idea. Let's put shows on; let's put operas on; let's put all the stuff on that the market wouldn't put on.' But, then what you're doing is actually, you look at the people who actually watch PBS [Public Broadcasting Service], and there's a very narrow band of people who go to the opera anyway. This is the problem with the BBC [British Broadcasting Corporation]. It's super-serving the very people who don't need any help: they're doing it of their own volition.

And so, to actually--Milton pulled himself up by his bootstraps, as you say. He grew up without a father. Very hard working mother. Pretty unglamorous, those early years for Milton. He sold t-shirts in order to eke out enough so he could eat when he went to school, and so on. Which is where Rose points at Samuelson lying on the beach in every summer vacation, saying, 'He's not doing anything.' Then Samuelson, in his defense, would say, 'I had all of these scholarships. I was [?] mean when I'm took somebody else's job. I didn't need the job.'

So, when we get back to Milton Friedman's very clear understanding of: 'Just because you say you've cured a problem, you liberals, it doesn't mean you have done. You might feel happy about it, but if you think about it for a minute in your heart of hearts, you know the way you've replaced as one tyranny with another tyranny. And, there are ways out of this and I'll show you how you do it. You open the doors and let people out. You don't lock them into some system that you've invented because you think it would be better.'

This is all straight Hayek really, that is: the agents of the state, why should they know what people's choices should be? They don't. Because they are comfortably well off. They're in a secure job. The Federal Government won't be abolished. And they're making grand decisions as if they were duke in medieval times or something for the peasants.

And, that's inappropriate, because this is democracy and people should be allowed to follow their own lights. 'Like I did,' said Milton.

I think that that was an inspirational thing, for a lot of people.

Russ Roberts: And, of course, early on some of his earliest work was on rent control, which has good intentions: Make housing more affordable. And, yet Friedman argued that it led to--I think it was a paper did with George Stigler in the late 1940s or early 1950s--that it actually reduced supply housing and therefore wasn't helping the people that was supposed to help.

Nicholas Wapshott: Absolutely. He and Rose of course, both worked for the New Deal. Their early jobs were for the New Deal. Which [?] we should all find ironic. So, he saw it first. I mean, knowing what he thought, he was seeing it firsthand, what Amity Shlaes did so brilliantly in exposing the tyrannical aspects of Franklin Roosevelt. The things that he closed down: You can't keep chickens; you can't grow this; [inaudible 00:53:17]. I mean, all those sorts of inhibitions which were imposed by the state in order to get a small number of people to prosper. So, you're picking and choosing now between citizens.

Whereas, Milton was: 'Everything should be open to everybody, and everybody should have equal access to whatever is available. And, we've had enough people who think they know better because I know people like that and they don't look after me.' I think it was very personal for Milton.

Russ Roberts: But, the other point about that, I think is correct, that Friedman was--the other part of Samuelson's quote, 'Friedman was uncompromising. He was an ideologue.' I think he would probably claim he wore two different hats, the ideologue hat and the academic hat; but my claim has always been that it's hard to keep them separate. But, I do think that, Samuelson's assessment was correct there. And, it's not a bad summary of what made him tick.

Nicholas Wapshott: It's a very good summary. Yeah. It was not entirely flattering either, actually.

Russ Roberts: No. It's a bit of smear, but I think there's some accuracy to it. I'm not sure it's actually a smear, on paper, anyway.

Nicholas Wapshott: I don't think he intended it to smear, either. I think he was trying to honestly assess who his friend Milton Friedman was.

54:38

Russ Roberts: But, he did have a negative assessment, which I wanted to come to--we alluded to it earlier. I'm going to quote it, which is one of my favorite--one of my least-liked quotes.

But, before we do that, I have to quote the quote you have from George Schultz, which is rather spectacular. Schultz said something along the lines of--oh, here it is: "Everybody loves to argue with Milton, particularly when he isn't there."

And, when I read that line--that's a great line. And, it's so true. He was a brilliant, brilliant debater. And, he loved it. And, he, as we've mentioned on the program before, particularly talking with Bob Chitister, he always had a smile on when he stuck the dagger in. He made you feel good about it. As you said, he was a very charming man.

Nicholas Wapshott: Because it was George Schultz who brought him onto the Hoover and gave him a sort of refreshed life, post-academic life or a post-academy life, I should say. Because there's no stifling him. But, he prospered in Hoover. And, I think that--but you'll know because you also have been to the Hoover--that there is a sort of ghost of Milton which lingers around, particularly those open areas where people used to have coffee and cake and tea and so on, where Milton would just amble up and take on all comers, like a sort of a prize fighter at a country fair. And, that spirit is missing, I think. That--well, the old, sort of, essence, arguments has gone from Hoover as far as I can understand, which is a shame. This was the thing that made it.

Russ Roberts: Well, it's true that he was a--that's a great line about taking on all comers. He's a little bit like a chess grand master playing speed chess with 20 people the same time. When I was--I was a national Fellow there in 1985 to 1987. And, one of the requirements of being a National Fellow was, you had to go to lunch. And so, the National Fellows would all go to lunch and we'd sit around, and we'd go once a week. I think it was on Friday. And, Milton showed up at a bunch of those. As did other fellows. But, for Milton Friedman to be there, a Nobel Prize winner, was always very flattering and exciting for us, because he wasn't there to just chit-chat. He wanted to test you at [?butch?] you, and see what you were made of. And, he tried to impose his will, his intellectual will. It was fabulous.

Nicholas Wapshott: I can imagine. Yeah. The Hoover, these were not laurels to rest upon. They were laurels to flag people with, really.

Russ Roberts: Yeah. For sure.

Nicholas Wapshott: I mean, he had a perfectly nice apartment in San Francisco, and it's a bit of a schlep actually to get out of the city and go down to Palo Alto.

Russ Roberts: It is.

Nicholas Wapshott: You didn't know the train or the car, whichever way you do it, it's taking a chunk out of your day.

But, I think that he knew that he would be meeting people who were open to persuasion. At least, if you were part of the Hoover, you would at least have that door open. Whereas in the rest of the Sanford, probably not.

Russ Roberts: I like to think it's still true of Hoover, but it doesn't have the--in my experience there in recent years, at least in the summer, which is when I was typically there, it doesn't have the social sparring back-and-forth that we've just evoked. Maybe it does during the school year. I don't know.

Nicholas Wapshott: I used to go in the summers through the 1990s, and yeah, the spirit was still alive then. And, I must've gone to what was probably almost the last seminar by George Schultz, who died just as this book was going to bed. Schultz was an extraordinary figure. And, he took part in everything. I mean, he was at church on Sunday mornings, in the Stanford: he was busy, Schultz. And, a very benign guiding hand, he was, too. Very sensible man.

Russ Roberts: Yeah. An incredible human being both in sense of achievement and longevity. I saw him late in his 90s give speeches. He was great. I'm sure it wasn't as good as he was 25 years before. But, he was a different--what? Yeah. Who is?

Nicholas Wapshott: Who is? Yeah.

Russ Roberts: Yeah. Good point. I'll leave that alone.

58:35

Russ Roberts: Let's--I'm going to give you that quote which I don't remember, I can't remember if you quote it or not, but it's a very telling quote. And, it was after Milton had died, which is, it was after 2008. And, I remember as I read that Schultz quote, that everyone likes to debate Milton, especially when he's not there, I was thinking, that Samuelson had slipped in as well to that. He says this is Samuelson on the Crisis, the Financial Crisis is: 'Today we see how utterly mistaken was the Milton Friedman notion, that a market system can regulate itself. We see how similarly the Ronald Reagan slogan was, that government is the problem, not the solution. This prevailing ideology of the last few decades has now been reversed. Everyone understands now on the contrary, there can be no solution without government.'

And, I think, personally, as a classical liberal, I think that's a misreading of the Crisis. But, you can make a good case he's right, and I think you can make a case he was wrong. It's not like the financial sector was unregulated and we'd left it alone and it ran amok. There was a lot of, tragically, I think a lot of subsidizing of that sector and a lot of actual regulation. I don't think that was the cause of the Crisis. But I think the subsidies did encourage imprudence.

But I thought it was just interesting that Samuelson in his old age at that point could kick Milton when he was not just down but gone. What did you think of that?

Nicholas Wapshott: Well, I mean, it sort of contradicts what he's saying. Isn't it? Milton was a long life spent having no lasting influences, is what Samuelson is saying.

But, in fact, this admitting is that: 'He's dead. I still have to keep kicking him to make sure he is dead,' because his ideas are coming back any minute, you know.

Now I think it was almost the last thing I put in the book, actually. He writes very interestingly, just to Larry Summers. Larry, who, when Milton died said, 'I grew up in a house thinking that Milton Friedman was the devil. And, I now know that he was far from being the devil. He was a good man trying to find a solution like everybody else.' Which was, for Larry Summers, a pretty generous thing to say.

Samuelson was very respectful when Milton died; but in private letters to Larry, he says, 'I really can't say what I need to say, because while the body's still warm in the coffin, you know, I got to wait a little time.'

And, then a little after that, he did it--completely damning. It was as if he spent his whole life going up cul-de-sacs. Spent his whole time going nowhere. But, Milton did farm[?]. That's why I think you've got to credit Milton with a lot of the libertarian ideas, which--whatever you say, certainly Trump is not your classic libertarian or your classic populist by any respect. But, the fact that the voters didn't know that, they hoped that he was something else.

Russ Roberts: That's an interesting argument. I think my personal take, which is, like you say, we're not even on the first draft of history at this point, but I think Trump's appeal was overwhelmingly cultural for people who felt he was speaking for them who had been left behind. He did do some deregulation. That's the, I think, the closest thing you can say that was libertarian about Trump. Pretty much in everything else, especially trade, which was an issue dear to Milton's heart.

The other thing I want to mention is that, Friedman hated NAFTA, the North American Free Trade Agreement. He loved free trade. He hated the idea that you needed an x-thousand page document to implement it. He said it should be one page: We hereby agree not to put tariffs or quotas on each other's products; signed, Prime Minister, President. End of story.

Nicholas Wapshott: Absolutely. Absolutely. But, in that respect, he was right, wasn't he, about regulation altogether? First of all, that whatever you intended to do, it always has unintended consequences. Always. I mean, all laws have that actually.

Russ Roberts: Yeah. It's true. Why that is, is an interesting question. I don't think we talk about it enough. I think most of the free market friends of mine exalt in that claim. It's somewhat true. There were probably some unintended consequences that are positive. My friends, that I don't like to always remember those. But I do think it's interesting that we don't dig deeper into that as I think we should.

1:03:02

Russ Roberts: One last thing on this issue of reputation; and I always felt after 2008, how little Milton mattered. It made me sad, actually. If he'd been alive, I think his voice would have been active. He was a natural rallying point for people who were skeptical of government. And, in the aftermath of the Crisis, of course, we had a massive stimulus package. You could debate--economists are still debating whether it had any impact, what its impact was, how big its magnitude was.

But, I think, as you say, you know, the Keynesian viewpoint of the multiplier and stimulus in general, so drowned out the intellectual history of the previous 25 years, it was like it had never happened.

And, without Milton being alive to champion his perspective, I've been surprised at how little remembered he has been in the last 10 to 15 years. He's not kicked John Kenneth Galbraith, for sure. He's had influenced a certain non-academic life. But in the policy sphere, if anything Hayek has been more influential, which shocks me. Would never have predicted that. Do you agree?

Nicholas Wapshott: Yes, I do.

And, it's unfair. I think probably I've gone through [?] Milton, because 15 years after the death of a giant, you shouldn't somehow feel that he's disappeared.

I think that Samuelson was quite right in a way, just in terms of the tribes that both sides managed to attract. And, Milton didn't leave a clump of academics who've thought along similar lines who could be proxies for him. If there were half a dozen--I mean, you think of Cambridge Circus that Keynes had around him. They went on after his death and they just carried on and on and on, like Jesus and his disciples. Samuelson is so well entrenched and so established that all established people represent what Samuelson thinks, I think. They don't have to do it. There's no fight on for them.

Russ Roberts: Well, I think there are a lot of people who want to be the next Milton Friedman or his acolyte. I know a bunch of them. I think in the academic world, it's a tough row to hoe. It is--the public intellectual part. Yes, there are free-market public intellectuals at the great universities in America. There's a few at each one. But, he didn't spawn--he spawned a movement of sorts. I think Capitalism and Freedom and Free to Choose and the PBS documentary were amazingly implementable in, as I said, keeping those ideas alive and on the table. They haven't really effected the political outcomes in America that--there's no, there are a lot of people who would imagine a world being better with smaller government, but they're not willing to vote that way. So, in that sense even more important than his academic contraires, I just feel like Milton was a lonelier voice than he would have liked.

Nicholas Wapshott: I think he combined two things which were essential. First of all, he didn't care what people thought about him. And, he was likable. Which is an apparent contradiction.

But, he might've been a gadfly, but actually he was the gadfly that you didn't put your nets down in the evening when the gadflies came out. He was good fun to have around, even when you were disagreeing. In fact, particularly when you disagreeing with him. I can't think of anyone who's arguing with him, argued with him, with whom I agree all the way through. I mean, it wouldn't be about fun, would it?

Russ Roberts: But, it's a remarkable point you make that it's 15 years after he died and his influence is, I think, somewhat thinner than I would have expected. Again, you could argue: Well, in the world of monetary theory and Central Bank behavior, his influence is immortal. But, in terms of the political things he wanted in the policy prescriptions outside of monetary policy, I don't know how important he is. But I think he'll have a heyday again, I suspect. If you go back and read Capitalism and Freedom, it's shocking to me how timely and thoughtful it still is. It's a thoughtful book.

Nicholas Wapshott: Yes.

Russ Roberts: Might not agree with it, but it's a thoughtful book.

Nicholas Wapshott: Yes. I think most of us, maybe not the TV [?], that age is, because of technology. Anything on PHS[?] looks old, like black and white movies look old. So, those aged badly.

But, I think that what we're talking about is actually all people in the public sphere, 15 years after their death, have been forgotten. It was probably true of Churchill. Probably true Franklin Roosevelt--the towering figures.

Russ Roberts: It's true.

Nicholas Wapshott: Nobody reads Updike anymore. You know what I mean? Nobody reads Norman Mailer anymore. Thank goodness. These huge figures in their day, they used to dominate our screens and you'd feel you're missing out if you weren't talking about it at a dinner party. But it's all transient, or for most people it's transient. You have to read Jane Austen to be read century, after century, after century.

Russ Roberts: My guest today has been Nicholas Wapshott. Nicholas, thanks, for being part of EconTalk.

Nicholas Wapshott: Great pleasure.


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