FRIEDMAN FRIDAY Milton Friedman’s video and transcript from C-Span in 1994 Part 1

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Milton Friedman’s video and transcript from C-Span in 1994 Part 1

Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2

Transcript below:

BRIAN LAMB, HOST: Dr. Milton Friedman, why did you choose or why did they ask you to write the introduction to the F. A. Hayek Road to Freedom 50th anniversary . . .
FRIEDMAN: Road to Serfdom.
LAMB: Yes, that’s your title on your book. Why did you do it?
FRIEDMAN: The reason they asked me was very clear, because Hayek and I had been associated for a very long time, in particular in an organization called the Mont Pelerin Society that he founded. The charter meeting was in 1947 in Switzerland. Hans Morgenthau, who was a professor at the University of Chicago when I was there, a political scientist, when I came back from the meeting, he asked me where I had been, and I told him that I had been to a meeting that had been called by Hayek to try to bring together the believers in a free, open society and enable them to have some interchange, one with another. He said, “Oh, a meeting of the veterans of the wars of the 19th century!” I thought that was a wonderful description of the Mont Pelerin Society. Well, Hayek and I worked together in the Mont Pelerin Society and we were fostering essentially the same set of ideas. His Road to Serfdom book, the one you have there, which was published 50 years ago, was really an amazing event when it came out. It’s very hard to remember now what the attitude was in 1944-45. Throughout the Western world, the movement was toward centralization, planning, government control. That movement had started already before World War II. It started, really with the Fabian Society back in the late 19th century-George Bernard Shaw, the Webbs and so on. But the war itself and the fact that in war you do have to have an enormous amount of government control greatly strengthened the idea that after the war what you needed was to have a rational, planned, organized, centralized society and that you had to get rid of the wastes of competition. That was the atmosphere. Those of us who didn’t agree believed in what we would call a liberal society, a free society — 19th century liberalism. There were quite a number of us in the United States and in Britain, but in the rest of the world they were very isolated, indeed. Hayek’s idea was to bring them together and enable them to get comfort and encouragement from one another without having to look around to see who was trying to stab them in the back, which was the situation in their home countries.
LAMB: The New York Times put on the op-ed page your introduction to this edition. Do you know why they did that? What got their attention?
FRIEDMAN: I can’t answer that. You’d have to ask the people at the New York Times. On the whole, they have in the past not been very favorable to these ideas — quite the contrary — but they’ve been changing. About two or three years ago, they published — they’ve turned many an op-ed piece from me, which I subsequently published in the Wall Street Journal or somewhere else. But a couple of years ago, they did publish an op-ed piece from me about the situation after the fall of the Berlin Wall, in which my thesis was a very simple one. Everybody agrees, as a result of the experience in the West, that socialism has been a failure. Everybody agrees that capitalism has been a success, that wherever you have had an improvement in the conditions of the ordinary people over any lengthy time, it’s been in a capitalist society, and yet everybody is extending socialism. After the fall of the Berlin Wall, there were no summits in Washington about how we cut down government. The lesson from the fall of the Berlin Wall was that we have too extensive a government and we ought to cut it down. Everybody agrees, but yet wherever you go, we have to extend socialism. The summit in Washington was about how you enable government to get more revenue in order for government to be more important, which is exactly the opposite. So socialism guides our behavior in strict contrast to what we believe to be the facts of the world.
LAMB: Let me ask you a little bit more about Friedrich Hayek. Who was he?
FRIEDMAN: Fritz Hayek was an economist. He was born in Vienna. He started his professional career in Vienna. In the late 1920s, some people in Britain at the London School of Economics were very greatly impressed with the book he had written and with the work he had done, and they invited him to come to the London School. At a relatively young age, he became a professor at the London School of Economics. He spent the 30s and most of the 40s there. Early in the 1950s, he left London and came to the University of Chicago where he was a professor for about 10 years, and then he went back to Germany. He essentially retired to the University of Freiberg in Germany.
LAMB: How long has he been dead?
FRIEDMAN: He’s been dead about two years now, I think. He lived to be 90, and he has an enormous list of books and articles and so on he has published. The Road to Serfdom, the one we’re showing here, was a sort of manifesto and a call to arms to prevent the accumulation of a totalitarian state. One of the interesting things about that book is whom it’s dedicated to. It’s dedicated “to the socialists of all parties,” because the thesis of the book is that socialism is paving the way toward totalitarianism and that Socialist Russia, at the time, is not different from Nazi Germany. Indeed, it was national socialism — that’s where “nazi” comes from. This was a kind of manifesto and had a very unexpected effect. It was turned down by several publishers in the United States before the University of Chicago published it, and both in Britain and the United States, it created something of a sensation. It was a best-seller. The Reader’s Digest published a condensation of it and distributed 600,000 copies. You had a big argument raising about people who were damning it as reactionary against all the good things of the world and people who were praising it and showing what the real status was. It’s a book well worth reading by anybody because there’s a very subtle analysis of why it is that well-meaning people who intend only to improve the lot of their fellows tend to favor courses of action which have exactly the opposite effect. I think from my point of view the most interesting chapter in that book is one labeled “Why the Worst Get on Top.” It’s, in a way, another example of the famous statement of Lord Acton that “power corrupts and absolute power corrupts absolutely.”
LAMB: Lord Acton’s quoted several times in the book.
FRIEDMAN: Oh, sure. Lord Acton was a great defender of a free society. The way the worst rise to the top is that if you’re given power and you have to exercise it, you are driven by that necessity to do things that many people really would object to doing. Only those people who are willing to behave in a public capacity differently than they would behave in their private capacity are ever going to make it to the top.
LAMB: Who was Lord Acton? G: Lord Acton was an English Catholic who was a great historian. He was a professor at Oxford. He had a named professorship, which I’ve forgotten. He wrote A History of Liberty, which was very famous and very important. He also was very much involved — this has nothing to do with this, really — in the dispute within the Catholic church about the infallibility of the pope. What do they call it when they call one of these . . .
LAMB: Encyclical?
FRIEDMAN: It’s a meeting which establishes a policy.
LAMB: Like Vatican II?
FRIEDMAN: Right. One of those in the end of the 19th century was the one at which they declared the doctrine of the infallibility of the pope, and he fought very hard against that because he was a believer in liberty and freedom and tolerance and did not believe that you should declare any man to be infallible.
LAMB: Why is it that so many conservatives today will cite you but also cite Hayek?
FRIEDMAN: Because, as I said in that introduction, over the years I’ve gone around and asked people who had shifted from a belief in central government and socialism and what today goes by the name of liberalism what led them to shift, what led them to an understanding that that was a wrong road. Over and over again, the answer has been The Road to Serfdom.
LAMB: You wrote an introduction in 1971?
FRIEDMAN: I wrote an introduction to a German edition 25 years ago. It was the 25th anniversary. My introduction here is primarily the same one. It’s just as applicable now as it was then. The really troublesome thing is what I mentioned earlier. Everybody is persuaded that socialism is a failure, and yet in practice we keep moving down the socialist road. When Hayek’s book was published in 1944 — or let’s take not 44, but take 46 or 50 just after the end of the war — government was much smaller in the United States than it is today. If I remember the numbers, government spending at all levels, for federal, state and local, was about 25 percent of the national income. Today it’s 45 percent. That doesn’t allow for the effect, not of spending, but of regulations — the Clean Air Act, the Aid to Disabilities Act and so on — so that, in fact, we are more than half socialist today; that is, more than half of the total output of the country is being distributed in a way that is determined by the government. That’s the regulations. We pride ourselves on being a free society and having a great deal of liberty. We do, compared to many countries of the world. But just consider the limitations on our freedom. You can’t choose what profession to go into. You can’t become a lawyer just because you want to become a lawyer. You have to get approval from the government. You have to get a license. That’s true for beauticians; it’s true for plumbers. It’s true in New York City and most big cities for taxicab drivers. There are enormous limitations on what we can do, and this goes much beyond the direct economic sphere. Consider the question of freedom of speech. During the 1950s, 60s and 70s when there was a big problem of inflation, the government was making a big push about selling savings bonds. They were a gyp. The amount you paid for the savings bond you would never get back in purchasing power. If you held a savings bond for 25 years, at the end of the time when you turned it in, not only was the purchasing power because of inflation less than it had been, but to add insult to injury, you had to pay a tax on the so-called income from it. At the same time, leading bankers would join in advertisements in the newspapers telling everybody to buy savings bonds. I went around and asked bank presidents that I knew why they did that. I asked them first, “Do you buy savings bonds for yourself?” “Oh, no.” “Is it a good investment?” “No.” “Why do you tell the public it is?” “Because the Treasury wouldn’t like it if we didn’t.” They’re not free to speak. I know from experience — I happen to be opposed to tenure in universities. But the only academics who are free to speak that way are people who have permanent tenure and on the verge of retirement. If you look at it from that point of view, there are enormous restrictions on what we can do and say, all imposed by the government. That doesn’t count the loss of freedom from the fact that they take money away from hard-working, productive people who are producing this national income and give it to people who are out of work, who are on welfare, or in prisons for that matter. It doesn’t include the corruption in our personal property rights that arises through the attempt to prohibit drugs, which has led to tremendous invasions on our liberty. You can have a drug enforcement person come to your door and knock on you because some unknown person has said you’re dealing with drugs. There are many absolutely heartbreaking cases of innocent people whose rights have been violated in this way, whose property has been taken away and who have been unable to regain it. I’m a very old man, and I was graduated from high school in 1928. That’s a long time ago. Now, if you look at the situation in 1928, we were much poorer in terms of physical goods. We didn’t have microwave, we didn’t have washing machines — you can go down the line. There’s no question that we’re enormously wealthier today in that sense and enormously have a higher standard of living from that point of view. On the other hand, we were safer, more secure, freer in 1928 than we are now. As of that time, government was spending something like 10 to 15 percent of the national income; the private sector, 85 to 90. Today, government controls over half the national income and private enterprise controls only the rest. Where have all these good things come from? Can you name any of those additions to our well-being that have come from government? It wasn’t government that produced the microwave. It wasn’t government that produced the improved automobiles. It wasn’t government that produced computers that led to the information age. On the other hand, consider our problems. Our major problems are not economic. Our major problems are social. Our major problems are the underclass in the center cities, the development of crime so that today we’re much less safe than we were when I graduated high school. We have much less feeling of security, much less optimism about what the future’s going to be like, and all of the problems have been produced but government. Consider the schools. The quality of schooling I got in a public high school in 1928 was almost surely a great deal higher than you can get in any but a small number of schools now. You have the dropouts, you have the decline in scores on SAT and the like. Why? Because education is the most socialized industry in the United States. Ninety percent of our kids are in public schools, ten percent in private, and education is a completely centralized, socialized system, and it behaves just the way every other socialized system does. It produces a low-quality output, benefits a small number of people — currently mostly those who are associated with the National Education Association, the American Federation of Teachers — and does a great deal of harm to a lot of people.
LAMB: Let me ask you about your own beginning. Where were you born?
FRIEDMAN: I was born in Brooklyn, but I had sense enough to move out when I was 13 months old.
LAMB: What did your parents do then?
FRIEDMAN: My parents moved to Rahway, N.J., and they were small-scale businessmen who never had an income and by today’s standard would have exceeded the poverty standard. They moved to Rahway, N.J., where they at first had a small textile factory, and then that wasn’t very successful and so they opened a small retail store and that was the source of their income.
LAMB: What influence did they have on what you decided to do for college?
FRIEDMAN: Very little, except for the fact that they encouraged me to want to go to college. As it happened, my father died before I had graduated from high school. I had three sisters and myself. I was the youngest, and I was the only one of the four who went to college.
LAMB: Where did you go?
FRIEDMAN: Rutgers University.
LAMB: A state school.
FRIEDMAN: No, at that time it was not. Rutgers is a very old institution that was established before the Revolution by the Dutch Reform Church, and at the time I went to it, it was really entirely a private school. Only subsequently was it converted into one of the mega state universities.
LAMB: What did you study?
FRIEDMAN: Hold on. However, I was able to go to it because of an action of the state. The state of New Jersey at that time offered scholarships on a competitive basis. Had a series of exams, and the people who succeeded in those exams and who could demonstrate financial need received free tuition at Rutgers. It was because of that that I was able to go to Rutgers. Now, the tragedy. At the time, that was a very valuable thing. The tragedy is that the state of New Jersey in their new incarnation now has a similar program, but the qualification for getting a scholarship is below average academic quality. It’s a program to raise the lesser qualified. It typifies what’s happened in our society. Instead of emphasizing strengthening the opportunities open to the able, we have tended increasingly to shift into a state of victims in which the emphasis is on raising the people at the bottom. Now, no social progress has ever come from the bottom up. It’s always come from the top small number pulling up the society as a whole and raising it.
LAMB: When did you first get into economics?
FRIEDMAN: I went to Rutgers and I did a joint major at the time in economics and mathematics.
LAMB: Why did you pick it? Do you remember?
FRIEDMAN: No. I liked mathematics and I was good at mathematics and I wanted to be able to earn an income. I may say, I worked my way through school, of course. I earned my own income. I wanted to be able to earn an income. As an innocent youth, the only way I knew that you could use mathematics to earn an income was in actuarial work for insurance companies, and so that was my initial objective. How I got into economics, I don’t know, but somehow or other I did get into economics. Now, by the time I graduated in 1932, the situation was very different. We were in the midst of the worst depression we’ve ever had. The major problems of the country were economic, and it’s natural that I would have been interested. As it happened, I was very lucky. When I graduated in 32, I was able to get the offer of two tuition scholarships, one from Brown University in applied mathematics and one from University of Chicago in economics, and it’s easy to know why I took the economics at that time.
LAMB: How many books have you written?
FRIEDMAN: Oh, I don’t know, 15.
LAMB: The best seller?
FRIEDMAN: The best seller is undoubtedly Free To Choose, which was written by myself and my wife. It was based on the TV program of the same title. It was a 10-part TV program that was shown in 1980 on PBS. In reverse of the usual procedure, the TV program wasn’t based on the book; the book was based on the TV program, because I insisted that I was not going to talk to a written script for the TV program but I was just going to talk. Then from the transcript of the TV program, we developed the book. It’s undoubtedly the best seller, although the other you have there, Capitalism and Freedom — again, this is a very interesting contrast. That back was published in 1963. At the time it was published, it was so out of favor, so much outside the intellectual atmosphere of the time that it was not reviewed in any major paper or magazine, other than the Economist in London. It was not reviewed by the New York Times, by the then Herald Tribune, Time, Newsweek. None of them reviewed it, and yet over the subsequent 30 years, it has sold something like a half a million copies.
LAMB: The tie you have on . . .
FRIEDMAN: That’s Adam Smith’s tie.
LAMB: Adam Smith comes up in all your books.
FRIEDMAN: Oh, of course. Adam Smith was the founder of modern economics.
LAMB: When did he live?
FRIEDMAN: In the 18th century. Adam Smith’s great book The Wealth of Nations was published in 1776, the same year as the Declaration of Independence.
LAMB: When did you first read it?
FRIEDMAN: In college as an undergraduate.
LAMB: Is he the guy who’s most important in your education?
FRIEDMAN: Well, that’s very hard to say. He certainly had a major influence on all of us, but after all, I think the influence when you get an education comes from people who are living people, not from books. Books influence you. There’s no doubt about it. They make a great difference. But the person who is probably most important in my education — there are several. One is Arthur Burns, who was subsequently chairman of the Federal Reserve System and so on. He was at Rutgers, and he taught me as an undergraduate and he was really my mentor for a large part of my professional career. I owe a great deal to Arthur. But then I went to the University of Chicago and there was a group of teachers at the University of Chicago — Jacob Viner, Frank Knight, Henry Simons — who played a major influence in shaping my views and attitudes.
LAMB: When did you think you had enough independent thought to start writing books like Free to Choose and Capitalism and Freedom?
FRIEDMAN: That was very late. Up until that point, prior to that, my writings were scientific. See, these books give a misleading impression of my publications. Most of my publications are technical, scientific, economic publications, which really do not have any great interest to the public at large. That’s a best-seller, Free to Choose, but there’s no question that the most influential book I’ve written is not Free to Choose, but a book that sold probably one-twentieth as many, 5 percent as many copies, namely A Monetary History of the United States, which I wrote jointly with Anna Schwartz. So I really had a fairly large body of technical economic literature before I started writing on public policy.
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