YouSaid · the spoken record

Jennifer Burns

lines on the record: 240
first: 2025-01-19
most recent: 2025-01-19
sittings or episodes: 1
sources: podcast

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“Yeah, so Knight is talking about where profit come from, and to his mind, it comes from the entrepreneurial function and the risk-taking function. And so he kind of weaves that into why capitalism works best and why it's the most effective allocation machine and why it assigns responsibility in a way he believes that a socialist system never could. Knight, though, is not a booster of capitalism. It could be, in part because he's just a darkly pessimistic kind of depressive guy. And so he's afraid capitalism is going to collapse and socialism or fascism is going to take over or communism. And so he kind of descends into darkness there. Friedman as the more optimist believes with Hayek that you can develop a different approach to capitalism that would preserve the price system, preserve allocation, but build”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, now I should say the Phillips curve is still out there. It's been expectations augmented and it is relevant in the short term. But Friedman's warning is still very much apt that if you get too focused on unemployment, you can let inflation out of the bag. And so until very recently, the Federal Reserve's tradition has been focusing on inflation, believing that's fundamental and that will keep unemployment low rather than trying to lower unemployment at the cost of raising inflation.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and what's really makes it happen is that many of the economists who most deeply dislike Friedman and most deeply dislike his politics in the 1970s as they're running their models, they start to say Friedman's right. They start to see in the data that he's right. And a very parallel process happens in Britain. Britain is going through a very similar burst of spending, burst of inflation. And so Friedman is vindicated and is very profound way in the way that he himself said would be the ultimate vindication, which is my theory should predict. So that prediction of stagflation is really the sort of final breakthrough of his ideas. And also, you know, their importance to policy and to thinking about how we should intervene or not in the economy and what the role of the Federal Reserve is because he's saying the federal reserve is incredibly powerful. And finally, people start to believe.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Unemployment. This hasn't been seen, but he says theoretically this could happen. And then he goes and he says, and the government has started expanding the money supply. It started expanding the money supply in 1966. So we're going to get a bunch of inflation. And then we're going to get a bunch of unemployment. And he estimates about how long it will take. And then he says once this all happens, it will take about 20 years to get back to normal.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“This is wrong. This might work in the short term, but it's not going to work in the long term because in the long term, inflation has, first of all, it has a momentum of its own. Once it gets going, it tends to build on itself, the accelerationist thesis. It accelerates. And once inflation gets going, and the reason it gets going is because workers go to the store and they see the price level has gone up. Things have cost more. They ask for the wages to go up. Then, you know, people eventually the wages will go up too high and they will no longer be hireable or companies will decide at these high wages I can't hire as many workers. I'd better lay off. So if inflation keeps going, eventually over the long term, it will result in high unemployment. So he says theoretically, you could end up in a situation where you have high inflation and high”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Things are happening, more and more people are getting hired. And so this relationship has led policymakers to think that sometimes inflation is good. And if you want to lower unemployment, you could let inflation kind of go a little bit. And in accrued forms, it becomes to seem like a menu. Like you could take your model and you could plug in, I want this much unemployment. And it would say, well, great, this is how much inflation you should do. And so then you would target that inflation rate. So Friedman gets up and he says,”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So, I mean, that's a fascinating story. And so, what happens is Friedman has advanced all these ideas. He's royal the economics profession. He's built a political profile. And then he becomes the head of the American Economics Association. And he is asked in that role to give a presidential address. And so he gives this presidential address December 1967. And he says, I'm going to talk about inflation and I'm going to talk about the trade-off between inflation and unemployment. And this is what's generally known as the Phillips curve. And the Phillips curve in its original form is derived of post-World War II data. So it's derived of about 12 years of data. And it shows that when inflation goes up, unemployment goes down. And the idea would make sense that as the economy is heating up and lots of”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Theory of money to analyze the macroeconomy. It's proposing a policy of slow and steady growth in the money supply. And then it is arguing that inflationary episodes, when they emerge, are profoundly driven by changes in the money supply, not by anything else.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“So he's taking monetary policy at a time when most economists think it's completely irrelevant and saying this is the central game of the economy. Now, we live in a world where we believe this and the Federal Reserve chair can't open their mouth without headlines being generated. But Friedman is saying this at a time when the Federal Reserve is like a mysterious and secretive organization. It's not well known. It's not deeply appreciated. Some of the only people who appreciate the Fed's power are like hardcore rural populace who have constituents who think the banks and money power, the problem who are like, you know, throwbacks from the frontier days. So Friedman in the beginning has no constituency for this policy. He has no constituency for this analysis. And so just going back to summarize monetarism, it's looking, it's using the quantity.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the core policy proposals of monetarism is let's grow the money supply at a steady rate. And in the beginning, Friedman just says K%. He doesn't even put a number on it because he says the number doesn't matter. What matters is the steadiness in the growth rate. Because if it's a steady growth rate, it will fade away. And then people will make economic decisions based on the fundamentals, not based on what they think is going to happen, not based on hedging against inflation or hedging against deflation. They'll just be able to function. So this is sort of the paradox of monetary policy when it's happening right. You don't see it. You don't notice it. When it's happening wrong, Friedman argues it can just fundamentally destabilize everything. It can cause the Great Depression. It can cause an artificial boom.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Reserve and its influence on interest rates can either make money more cheaply available and more freely available in the economy, or it can make money more expensive and slow things down. The central core idea of monetarism is this is potentially very bad if the government can hit the gas and then hit the brake and hit the Based on, say, what a politician wants or what somebody the Federal Reserve wants, you have a lot of instability in the system. And so.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Money in savings accounts and money in checkings accounts and money in savings accounts can earn interest and is generally believed not to circulate or money in checking accounts does not at that time bear interest and cannot legally bear interest and so is thought of as circulating and then there's different institutional architectures of postal savings banks and credit unions so but Friedman is one taking the focus to these aggregate amounts of money and saying these really have a lot to do with economic booms and busts when we have an expansion in the amount of available money we see an expansion in economic activity when we have a contraction in available money we have a contraction and so he says at this stage the government through the mechanism of the federal”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Through that economy as a whole. And so what he and Anna Schwartz do is they construct what are called monetary aggregates. This is adding together, say, all the money that's on deposit in banks and all the money that's believed to be circulating in people's wallets. And you also have to really go back in time. You know, we don't have credit cards. There is a stock market, but it's tiny in terms of the number of people who invest. There aren't mutual funds are introduced. This is like a big deal. So we have a much, a very simple monetary system. And so Schwartz and Milton Friedman start measuring what they call the monetary aggregates. They focus on M1 and M2. And their favorite aggregate is M2, which I believe is encompassing sort of deposits and circulating. Medium. The other thing to recall, there's some fine distinctions between”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“So, yeah, and some of this, I could take some of this back again to Frank Knight. So one thing Frank Knight said to all his students was the market is the best allocation mechanism we have. The market is what allocates resources in a situation of scarcity. The market allocates them the best. And Hayek will add to that by saying prices are information signals and a price sends information to buyers and sellers about how they should act. And these are the two of the strongest arguments for why the government should not intervene in the price system because it will blur information or because it will allocate less efficiently than market allocation will. And so what Friedman is really going to add to that is maybe going up a level and thinking in the macro about the whole economy and how money circulates.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“For now, I'll just say that conservatives in the United States becomes a political brand that contains elements of conservatism that are recognizable across time and space embrace of tradition, more comfort with hierarchy, et cetera. And it also has something new and different, which is Friedman's ideas about Milton Friedman's advocacy of more free markets, less government regulation, and the benefits of capitalism and the benefits of freedom. And that gets folded into American conservatism in part because Milton Friedman is such a powerful intellectual figure. And after his advocacy of Goldwater, the media realizes this guy's really smart. He has really interesting things to say. He makes great copy. He makes a great guest. And he starts writing a column for Newsweek magazine, which is a very big deal and a much more consolidated media environment. And he's quoted in all the newspapers.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“So, this is the years when conservatism, there is a movement that calls itself conservatism. And Friedman is very tightly allied with this movement from the beginning, partly through his friendship with William F. Buckley. And a lot of people say to me, Yeah, but Friedman's not conservative. And this is like a bigger, you'd have a whole separate podcast on this, but.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“It's probably brightest moment in the sun is the administration of John F. Kennedy, who brings in a lot of Harvard and Yale professors to the Council of Economic Advisors. He proposes a series of spending programs that are really guided by the Keynesian philosophy. And Barry Goldwater is tremendously controversial, part for his votes against civil rights, which Friedman really supports, in part because he's the hardcore libertarian in an age when that's not in the political mainstream or not discussed in the political mainstream. And I mean, he's just tremendously unpopular, particularly in all the educated precincts where Friedman lived. So Friedman is like an outcast and a pariah for his support of Goldwater. And so that actually really affects monetarism because people feel that this is now becoming a package deal. And so there's a great reluctance to embrace Friedman's ideas because it seems like you would then have to embrace his politics.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“And other economists remember they're building complicated mathematical models. And Friedman's doing extremely simple stuff. And they just think it's dumb. It's not interesting. It's not true. They just, they don't buy it at all. And so, but after a monetary history of the United States, they have to pay attention. So it's really in those years Freeman is hammering this idea of monetarism and it starts to become something respectable, bordering on respectable for other economists to look to and think about. And that's really the beginning of the kind of Keynesian monetarist split, where if you start to give Friedman any credence, you're heading towards a monetarist position. Now, at the same time, Freeman comes out very publicly in 1964 as a supporter of Barry Goldwater. And Keynesian economics has found a home in the Democratic Party.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Economists are just observing a regime in which the Federal Reserve has no power, a regime in which there is really little inflation, the inflation that is seen is post a little burst of inflation in the Korean War. And they're saying inflation is not really important. It's not really relevant and money's not really relevant and important. And so to break through and to make the argument, that's why Friedman and Schwartz go to history. And they're able to make that argument for history. Friedman is coming out with a variety of papers that are saying, When I look at economic fluctuations,”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“In order to pay for World War II, the federal government sells a lot of bonds. It issues a lot of debt. And it wants to pay this debt back at a low interest rate. And it wants people to keep buying it. It wants the low interest rate to be competitive with other interest rates. So once in general, low interest rates throughout the economy. And the Federal Reserve has been so discredited by the Great Depression that the Treasury basically runs the Federal Reserve and says, keep interest rates low. And so that's what it's doing. And so the Federal Reserve has stopped being an independent entity. It's just a sub sort of department of the Treasury. But in 1951, they negotiate what's called the Treasury Fed Accord. And the Federal Reserve gets its independence, but it doesn't really use it. But statutorily, it now has it. And so most”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's a very counterintuitive argument to make. It's a very historical argument to make. And this is absolutely fascinating to me with Anna Schwartz, he develops this 150-year time frame. He also has students working on episodes of hyperinflation in different periods of time. He's also looking back to like ancient history, inflationary episodes there. And he's saying this is a law of economics. This is something that recurs throughout time. It's not historical, right? It's not contingent. It's a law of economics. And, you know, his Keynesian counterpoints are saying, no, that's not relevant any longer. Maybe once it was relevant, but it's not relevant today. Now, in some ways, they have a point because”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Bear repeating, but Friedman is saying this very basic relationship holds true even in an advanced industrial economy. And that is what people have started to doubt. And if you think about money, you think about banks, you don't think necessarily about the federal budget spending and taxation. And what you see happens in American economics. The textbooks previous to the Keynesian Revolution, they spent a lot of time on money. They spent a lot of time on interest rates. You can do word counts and other scholars have done the word counts. And then word count for money after World War II just plummets and you start seeing things like taxation, budget, those things go up. So that what happens is the economics profession shifts its attention. It just looks away from money to other things. And Friedman is one of the few who say, no, money still matters. Money still counts.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what is monetarism? The easy way to summarize it is this famous dictum of Milton Friedman's. Inflation is always and everywhere a monetary phenomenon. And it's fascinating that he becomes an expert in inflation because the first research and the first major research product of monetarism is that theory of the Great Depression in a monetary history of the United States. And that is a theory of a deflation, all prices going down. And he will go back to an idea that Irving Fisher had popularized, but a very old idea, almost a truism, the quantity theory of money, which says the level of the price level is related to the amount of money circulating in an economy. So if you have more money, prices go up. If you have less money prices go down. Now, this seems like very basic and almost too basic.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Would like to be considered for a position in the economics department, and Friedman Milton Friedman says, no way, you're not really an economist because you're not empirical, because you just develop these theories. So he has an appreciation for Hayek as a social thinker, but not as an economist. So what Friedman decides to do, his answer to Keynes will be deeply empirical, but it will also be theoretical. And it will create an alternative intellectual world and approach for economists who aren't satisfied with Keynesianism. And almost single-handedly, Friedman will introduce sort of political and ideological diversity into the field of economics, because from his beachhead in Chicago, he will develop the theory of monetarism.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“In the 1920s and 1930s, as mathematics becomes the language of economics, Hayek is completely left out in the cold. Now, Friedman to some degree is left out in the cold, but Friedman at least has proved the mathematical economist that he knows what they're up to and he's rejecting it from a position of expertise and knowledge. And he literally drives the mathematical economists out of Chicago. They're clustered in a group called the Coles Commission, and he makes their life hell. They flee. They flee the Friedman onslaught slot. But then when Hayek arrives at the University of Chicago,”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Can and must maintain a competitive order. That is, the system of laws, of norms, of practices that makes it possible for markets to function. And this is one of these key differentiators between the older philosophy of laissez-faire and the newer reconceptualization of liberalism, which says, yes, we need a state, we need a state that's not intervening in markets under social democratic auspices, but is structuring and supporting markets so that they can function with maximum freedom, keeping in mind that if there aren't basic social supports needed, the market is apt to generate the type of either inequality or social instability that will call the whole system into question. So Hayek is really key in promoting this modified liberalism. But from being a very prominent economy,”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Who he believed shares his values of what we would call today classical liberalism. And to kind of create a counter consensus to the one that's gathering. Now Hayek also chooses not to argue against Keynes, and he feels that this is a huge missed opportunity, that he should have staked out the case against Keynes, and that because he did not, people come to believe there is no case against Keynes. Keynes is literally unanswerable. So Hayek will have this great regret. Will channel some of his regrets into sort of community building, specifically developing the Montpelleran Society. And it will fall to Friedman to really make that case against Keynes. But Hayek will end up at Chicago. And Hayek really influences Friedman to think about what Hayek calls the competitive order and how the state”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Been talking about what is happening in the United States. It's also happening in Britain. And so he writes this book that becomes incredibly famous, The Road to Serfdom, basically saying taking these steps towards a planned economy or an economy that's a modified form of capitalism is going to, he's very clear that this is not an inevitability. But if the same steps are taken and people follow the same line of thinking, we may end up in a sort of coercive totalitarian state. So this becomes enormously popular in the United States. First of all, he's in good touch with Friedman's teachers even before this book comes out. They see them as kindred spirits. Frank Knight is in touch with him. Henry Simons is in touch with him. They all see themselves as liberals. They call themselves old-fashioned unreconstructed liberals. And so even before he becomes famous, Hayek will be trying to kind of organize thinkers.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So FA Hayek is an Austrian economist who takes up a posting in London. And, you know, he's a mentor, a mentee rather, of Luduguan Mises. He's writing about business cycles, Austrian capital theory, and the depression hits. And he's one of the few economists who in the beginning really is not calling for much intervention. Although as he realizes how politically unpalatable that is, he will develop a more softened version of Austrian economics that has room for a whole range of social services. What's significant about Hayek is that he is also watching what's happening in Austria, what's happening in Germany, and he's really worried the same thing is going to happen to the Western democracies. And he sees the root cause of this as socialism, this shift towards an expanded role for government, which.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“than any other time and that's why I argue I think he would have been supportive of at least the first rounds of coronavirus relief because I think he would have put his emergency thinking hat on. So in that way he was definitely more flexible.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“The deposit banks and the banks that took deposits were much more highly regulated and they were supported by the FDIC. But the point being the Chicago school had these very radical proposals for reform, go off the gold standard, restrict the currency, you know, change the banks, immediately relief payments now. What is important to note, though, is that they thought of all of those as emergency measures to get through the emergency, not as permanent alterations in the state of what had to be and not permanent alterations between state and market, where the Keynesian assumption is things have changed, times have changed. We're in a new dispensation, and we need a new relationship. So Friedman is very, Milton Friedman is very open to doing things differently in a state of emergency. He will have different ideas during World War II.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no, he didn't see that. And what's really interesting is the number of incredibly radical proposals that he and his teachers were floating. So I've mentioned Frank Knight. Another really important influence on Friedman was Henry Simons, who was a junior professor at Chicago. And Simons had this idea for what he called 100% money, which would be a law that says banks have to hold 100% of the deposits they receive. They can't loan them out on the margin. This would completely and totally have overhauled the U.S. banking system. And he would have said there's a category of things called banks where you get deposits, and then there's going to be a category of sort of, he didn't say investment banks, but investment vehicles that will invest. So similar to what did happen in some ways in the banking reforms in the 1930s, the investment banks were split from”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Liquidate real estate, liquidate stocks, purge the rottenness out of the system. People will live a healthier life. And certainly they were members of the Federal Reserve who felt like it would create, they didn't say moral hazard, but it would create what we now call moral hazard, bad habits, were we to intervene and to save failing banks because failing banks need to be taught a lesson. They need to be taught disciplined. And so a lot of people, I think, saw it in the context of discipline. This is discipline. And if you remove the discipline, you'll be taking away something fundamental in society.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I wish I knew an answer to that question. I don't know enough about von Mises and his reaction in the Great Depression. I think I would hazard that he Look more to the down the road and say, well, if you start here, you're going to go places that are bad. But I don't factually know what he said in response. I do know that Hayex position doesn't last very long. It's not a position you can hold to. Maybe you could hold to it in other cycles. The other thing that was interesting is I found very few Americans saying this, most who were were kind of small town electeds or the most famous is Andrew Mellon quoted by Herbert Hoover. So not directly, we don't have him on record saying this, but apparently Hoover records in his memoirs that Mellon said something like,”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. And so Hayek will make the turn towards accepting more of a state and then we'll come to talk about how the state needs to support what he calls a competitive order. But his mentor, Ludwig von Mises still remains very hardcore and is not really open to things like unemployment insurance or other state-based interventions.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Wages need to come down far enough, and people need to be desperate enough to start taking work and to start the machine again. So the theory would be if you give people relief, they might not go back to work. Now, almost nobody says that in the Great Depression because the situation is so bad and it's people are starving on the street and people feel for humanitarian ethical reasons it's not okay to say that the Austrians though at first, Hayek and Lionel Robbins are like, this is a business cycle and it needs to run its course and it will be detrimental if we intervene. And then pretty soon Hayek has to change his tune.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“You offer the money, they take it. If they fall off a ladder and break their back, maybe you help them out, maybe you don't, right? But there's not a whole apparatus of legal liability and safety and things like that. So that would be one piece. Another piece of laissez-faire would be free trade amongst nations. So no regulation of who can invest in a nation or who can take money out of a nation. So Nippon Steele could come and invest in US steel and there would be no grounds in which to reject that. Or you could, as a billionaire in the United States relocate UN. Not encompass centrally provided relief because in the pure theory, again, very seldom applied purely, but in the pure theory,”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“So, yeah, laissez-faire means leave a B in France. It's more often used as an insult than as an actual. Very few people are completely and totally laissez-faire. That would be like the pure laissez-faire would be the sort of pure maybe pure anarchist position. Like the state does nothing, or the state isn't even there. But it tends to, if I could maybe make it more precise, it would be focused on freedom of contract would be essential. And that means like the buyer of labor and the seller of labor must have absolute freedom to contract. So that means no minimum wage law, no working hours law, no employment law, things like that. This is all pre-progressive movement. A lot of things are that way, right? Imagine you're in 19th century America and you have a farm and you hire someone to help you on the farm.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, so the Austrians and the Chicago schools see economic prosperity and growth comes from individual initiative, individual entrepreneurship, kind of private sources. The private market is what drives economic growth, not the public sector. And so for Friedman then, the question is, what is a government's role? And because he's lived through the Great Depression, he's not laissez-faire. and he won't ever be laissez-faire. Now, interestingly, Hayek, living through the Great Depression, at first is laissez-faire. And he's like, sure, like, let it rip. And things get so bad that Hayek's like, okay, that's not going to work.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“But the key thing to remember is that Keynesianism and Keynes are different. And there's this famous episode where John Maynard Keynes comes to DC and he goes to dinner and he comes back and he says to one of his friends in London, he says, oh, yeah, it was really interesting. I was the only non-Keynesian in there.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“And you then have what Hall Samuelson will end up calling the neoclassical synthesis. And he's still in economics today. If you take micro, you're going to get supply and demand, scarcity, marginal analysis. If you take macro, you're going to get a very different approach. And that's more Keynesian-based. And so the idea is that, and this makes sense. I mean, you can think of this from statistics, right? The way things act individually versus when they're all added together can be very different. So there's this kind of uneasy piece where economists are using kind of neoclassical tools to analyze individual behavior and individual market behavior, and they're shifting to a different paradigm when they think about the economy as a whole. And in this paradigm, the economy as a whole, the federal budget, the taxing and spending power of the federal government become paramount. And that is called the fiscal revolution. And that's really the essence of Keynesian.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. And we can create a model, and so we can say, okay, in the model, the interest rate is here and taxes are here. So let's play with government spending. Let's make it up. Let's make it down. And then we can get an estimation. It'll spit out here's predicted GDP. So the other piece of the Keynesian revolution is it really gets people thinking kind of holistically about the economy as one conceptual unit.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Is as Keynesianism arrives in the United States. Franklin Roosevelt is not really a Keynesian. He's kind of an accidental or experimental Keynesian. And there's a bunch of different ideas in the United States that are very similar to Keynesianism. They're not theorized, but they're similar ideas that the government has to do something. So this all comes together. American economists realize that you can construct models in the Keynesian perspective. And if you can use numbers in these models, you can go to Washington, D.C. with numbers. And you seem like you have a lot more authority. And so math becomes really twinned into Keynesian economics.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the generation that becomes dominant is just like four years older. The men who become Keynesian economics, but that four years is really important because they come in to grad school and economics and they get exposed to the new ideas of John Maynard Keynes and they, you know, I think it's Paul Samuelson calls it like it was like a South Sea virus that attacked all of the younger economists immediately succumbed and like no one under 50 ever got the disease, right? Because their thinking's already set. And so Keynesianism, Keynes himself is very suspicious of math and economics. And he and Friedman is fascinating. One of the first books by Jan Tingerman, a Dutch economist, to use math and economics, use huge volumes. Volume one, Keynes Pansit. Volume two, Friedman pans it. So they're in the same page, but what happens?”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Too anxious to spend, they might not want to invest. And, you know, Keynes has these discussions of animal spirits, right? He's still Not just in terms of human rationality, but what are some other things going on in human beings? And people might decide to sit on their money. They might not invest it. And so what happens then is you could get stuck in a bad equilibrium. So in the neoclassical model, equilibrium kind of restarts and resets itself. And he says, no, we could get stuck here. We could get stuck in the depression. And in that case, what has to happen, he says, the government stimulates investment and the government itself invests. And then he argues that, you know, this is a student of his Richard Kahn says, you know, as the government invests a dollar, it has like a multiplier effect, a dollar spent by the government kind of ramifies out throughout the economy. So it takes the government and puts it in the center as opposed to say the banking system or the financial system, which would be the more Friedman analysis. And for many economists, of Friedman's generation, and he's a weird generation,”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“New theory for explaining what's going on. And the previous neoclassical understanding of sort of things go up and things go down. And when they go down, there's a natural mechanism to bring them back up. So when the economy is going down, prices are going down, wages are going down. Everybody's losing money, but eventually firms are going to realize, hey, I can hire people cheap. Hey, I can buy stuff cheap. I don't have a lot of competition. Maybe I should get in the game here. And then others will start to get in and then you regenerate prosperity in that way. And so Kane says, sure, that's one theory, but something different is happening right now. Part of why it's happening is because we have work, the working class is more empowered now. They're not simply going to just take low wages and ride them down to the floor. We might not hit the floor. But also he says people might become”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“That is what eventually comes to pass in the United States and in the kind of overall developed. Kind of develop profession of economics. The other piece of the puzzle here is the introduction of mathematics. And it's been around the edges, but it will pick up speed in the 1930s like the econometrics society has founded. They start publishing. People start using more statistical and mathematical tools to think about economics and they're given a boost sort of inadvertently by the rise of Keynesian economics. So Keynes is trained in the neoclassical tradition. He's an absolutely fascinating figure. He's been there in the peace negotiations at Versailles. He basically calls World War II. He's like, hey, we're going to have another war here caused by Germany because this peace treaty has been done in such a vindictive way. And people have made such bad decisions. He's there. He sees it happening. And so when the Great Depression unfolds, he basically comes up with”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“A new theory of capitalism That works in an era of mass democracy, where people can vote and people can express at the ballot box their unhappiness with what's happening economically. So this larger movement will generate of which F.A. Hayek is a part, Friedman is a part, that becomes the very early stirrings of trying to think about a new sort of liberalism, which will eventually be called neoliberalism.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, and the other thing he's stepping into is a world where in the United States there's a great deal of anger at capitalism, at the system, unemployed people on the street in Europe. There's rising fascist movements. In Asia, there's rising fascist movements. And so everyone's very concerned about this. And Friedman is seeing a lot of this through the lens of Frank Knight, who feels like we are maybe reaching the end of what he calls liberalism. He calls himself an old-fashioned liberalism. We're reaching the end of representative democratic government because representative democratic government cannot solve these social problems. And capitalism, as it has developed, knight is very pro-capitalist, but he says it's generating inequality. And this is putting too many strains on the system. So night will become one of the people who helps Friedman think, how do I develop?”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source
“Peaceful because the 1920s are a fairly peaceful decade in the United States. So this is a situation when the Great Depression hits. And as I mentioned before, the kind of most important institutional economist is Wesley Mitchell. And he has said he's written a whole book on business cycles. He doesn't see this business cycle coming and it hits and he doesn't have a good explanation for it. Now, perhaps the preeminent neoclassical economist was Irving Fisher. Now, Irving Fisher is big into the stock market, and Irving Fisher says sometime in late summer 1929, stocks are going ever higher and will continue to go ever higher forever. And so he loses his reputation after the stock market crash. So Milton Friedman is stepping into a field in which the greats have been discredited and there's an enormous economic crisis all around.”
2025-01-19 · Lex Fridman Podcast · #457 – Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom · IDENTIFIED FROM THE TRANSCRIPT · source