Jennifer Burns: Milton Friedman, Ayn Rand, Economics, Capitalism, Freedom | Lex Fridman Podcast #457

The following is a conversation with Jennifer Burns, a historian of ideas, including the evolution of economic, political, and social ideas in the United States from the 20th century to today. She wrote two biographies, one on Milton Friedman and the other on Ayn Rand, both of which I highly recommend. This was a super technical and super fascinating conversation. At the end, I make a few comments about my previous conversation with President Zelenskyy, for those of you who may be interested. This is the Lex Fridman Podcast. To support it, please check out our sponsors in the description. And now, dear friends, here’s Jennifer Burns.

You have written two biographies, one on Milton Friedman and one on Ayn Rand. If we can, we will focus on each one separately, but first, let’s talk about the ideas that the two of them held in common: the value of individual freedom, skepticism of collectivism, and the ethics of capitalism. Can you talk about the big-picture ideas on which they converged?

Milton Friedman and Ayn Rand, in the biggest picture, are both individualists, and they’re skeptical of collectivities and collectivism. Their unit of analysis is the individual: what’s good for the individual, what works for the individual. Their understanding of society flows from that.

They also both use this focus on individualism to justify and support capitalism as a social and economic system. We can put them in a similar category. We could call them individualists, or we could call them libertarians of a sort.

They’re also really different in how they approach capitalism and how they approach thinking. Rand developed her own moral and philosophical system to justify individualism, connect the individual to capitalism, and support capitalism as a social and economic system. Friedman struggles a bit more with how to justify capitalism, and he ultimately comes down to freedom as his core value—his “God,” as he says.

Freedom does connect back to the individual, but he’s not justifying capitalism for its own sake. He’s justifying it for its ability to underwrite freedom in the social sense and also in the individual sense.

At a high level, are there interesting differences between them? You already mentioned a few, maybe in terms of who they are personally, how they approach the justification for capitalism, or in other ways?

For sure. Beyond this idea that Milton Friedman takes a while to come to his justification of capitalism, Ayn Rand kind of has it from the start. She really focuses on the core quality of rationalism and rationality. Rationality is the defining feature of human beings, and so she works from there, whereas Milton Friedman eventually converges on this idea of freedom.

That’s one part of it. The other is that their intellectual styles are really, really different, and their interpersonal styles are really different.

Friedman has big ideas and big principles that guide him, but he’s also deeply empirical. He spends most of his career doing historical and economic research, pulling data from how people actually make economic decisions and live in the world, and using that data to test and refine his theories.

With Rand, to some degree we could say she’s empirical in that she lives through the Russian Revolution and takes a very big lesson from that. But her style of thinking is really first-principles and axiomatic: going from the basic idea of rationality and then playing that out in different spheres.

Those are just very different intellectual approaches. They lead, in some ways, to really different ways of thinking about how you get things done in the world. Rand is a purist. She wants to start with the pure belief; she doesn’t want it to be diluted. One of her favorite sayings was, “It’s earlier than you think.” In other words, we’re still moving toward a place where we can really hold and express these ideals purely.

Friedman, although he didn’t use this terminology, was much more of a half-a-loaf guy. “I’ll take what I can get, and then I’ll try to move to where I really want to be.” He’s able to compromise, especially when he moves from being an economist into being more of a political thinker.

That’s a really different intellectual style, and it also plays out in their lives. Ayn Rand is incredibly schismatic. She wants her friends to believe what she believes and support what she supports, and she’s willing to break a relationship if it doesn’t match.

Milton Friedman also tends to have friends who agree with him, yet he’s always willing to debate his opponents, and he’s willing to do so with a smile on his face. He’s a kind of happy warrior. He’ll actually win a lot of debates simply through his emotional affect—his cheerfulness and his confidence—where Rand will lose debates because she gets so angry in the face of disagreement.

They have a lot of similarities and a lot of differences, and it’s been fascinating to dive deeply into both of them.

I just relistened to one of Ayn Rand’s last lectures, or at least one that’s called that, and the confrontational nature of how she answers questions and addresses critics is fascinating. There is a kind of charisma to that.

I think both of them are very effective at winning over popular support, but in very different styles. Rand is very cranky, but she’s the most charismatic cranky person I think I’ve ever listened to.

People talked about meeting her and coming to believe in her ideas in a way similar to what people describe with Marxism: suddenly, everything made sense. When they came to believe in Objectivism, they felt they had this engine for understanding the entire world.

After a while, for most people, that became confining. But that certainty was something Friedman also had. He clothed it differently. He clothed it in happiness, where Rand clothed it, as you said, in crankiness or anger.

There’s also an arc to Rand. She gets angrier and angrier and crankier and crankier over the course of her life.

What I enjoyed about my research is that I was able to get into this early moment when she was different and a little more open, and then I watched her close and harden over time.

Would it be fair to say that Milton Friedman had a bit more intellectual humility? Could he evolve over time and be convinced by the reality of the world to change the nuances of his policies and the nuances of how he thought about economics or the world?

Absolutely. Friedman believed in being able to say, “I was wrong.” There are some things he said he was wrong about.

We’ll delve more into monetarism and monetary policy, but he was able to talk about the ways his ideas hadn’t mapped onto the world the way he thought they would. He gives a really interesting interview toward the end of his life where he’s beginning to voice some doubts about globalization.

He had been a prophet and a cheerleader of globalization. He really thought it would lead to a better world in all respects. But toward the end of his life, about 2 years before he died, there’s a note of doubt about how globalization unfolded and what it would mean, particularly for the American worker.

You can see him still thinking. I had assumed he became crankier and more set in his ways, and of course there’s a phase where he does become that way, especially as he’s in the public eye and there’s not room for nuance. But to find, in the last years of his life, that he was so reflective was absolutely not something Rand could do.

I think there’s a thread throughout this conversation where we should also say that you’re a historian of ideas.

I am a historian of ideas.

We’re talking about two people who fought for ideas—for freedom, for capitalism—and they did it in very different ways. It’s interesting to see the impact they both had, and how their elucidation and explanation of those ideas reverberated throughout society.

It’s also interesting to see how we, together as a society, figure out what works: the degree to which they influenced the public, individual administrations like the Reagan and Nixon administrations, and how their ideas might return, fade away, and then come back in modern times.

If you see the whole world as a game of ideas, we’re pushing and pulling and trying to figure things out. A bunch of people got excited about communism more than 100 years ago, then they tried it, and the implementation broke down. We keep playing with ideas.

These are two great examples of people playing with ideas.

That’s a thread that runs through this, and it includes pushing back against the movement toward communism and social democracy.

But one difference I really should emphasize is that Rand is a writer of fiction. She’s a philosopher, but she’s also a writer of fiction. She’s working almost in the mythic register and much more in the psychological register. She’s creating characters that people identify with and relate to experiences they’ve had.

That’s one of the reasons she hits so deeply. I read all the fan letters to her, and people would say things like, “I read The Fountainhead and now I’m getting a divorce.” They were having these incredible realizations.

I’ll meet someone and they’ll say to me, “Ayn Rand is the reason I went to medical school.” A couple of women said this to me a few years ago. They said, “It never even occurred to me that I could be a doctor until I read Ayn Rand. Then I said, ‘I’m going to go to medical school.’”

She has an intense impact on people. She thought of herself as rational, and she thought rationality was what she was doing, but she was also doing a kind of mythopoetic, psychological work.

Friedman, on the other hand, was much more rational. There’s a whole set of economic thinking, and he provides a rational framework for understanding the world. It’s the framework of neoclassical economics.

At the same time, he does draw on mythologies: the idea of America, the Gilded Age, the frontier mythology, and the mythology of the individual immigrant and settler. He draws on these, but he doesn’t create them. He’s playing a tune that already exists, whereas I think Rand does something deeper.

Her ability to reach into people’s psyche and fuse that emotional and psychological experience to an intellectual and political world is what makes her so powerful. I think she comes back into relevance in a different way than Friedman does because she’s tapped into a more universal human longing for independence, autonomy, self-creation, and self-discovery.

Nevertheless, there are still pragmatic ideas that are important today from Milton Friedman, even just on the economic level. Let’s dig in.

Let me try to summarize who Milton Friedman is, and then you can correct me. He’s widely considered one of the greatest and most influential economists in history—not just of the 20th century, but ever. He was an advocate of economic freedom and individual freedom in general. He strongly advocated for free-market capitalism and limited government intervention in the economy, although you give more depth and nuance to his views in your books.

He led the famed Chicago School of Economics, and he won the Nobel Prize in Economics in 1976. He greatly influenced economic policies during the Reagan administration and other administrations. He was a highly influential public intellectual, not just among economists.

He lived from 1912 to 2006, so he lived and worked through some major world events in which his ideas were really important: the Great Depression and the New Deal; World War II and postwar reconstruction; the rise and fall of the Bretton Woods monetary system; the Cold War and all the conflicts involved in it; the tensions around communism; the fall of the Soviet Union; and China’s economic transformation.

There’s also the stagflation of the 1970s, and I’m sure there’s a lot more. Can you continue this thread and give a big-picture overview of the ideas he is known for?

That’s a great summary. You learn fast.

Let me start with the economics and then transition to how he used those economic ideas to become a real voice in the American conservative movement and the American political realm.

I’ll highlight 4 ideas, contributions, or episodes. One was his work with Anna Schwartz in revising our understanding of the Great Depression. That’s tightly related to the second, which is monetarism and the explanation of stagflation in the 1970s. That really became one of his career-making predictions, and we can dig into it.

In terms of technical economics, he’s known for the permanent income hypothesis, which he developed with a group of female collaborators that I can talk about. Those are the technical pieces that end up being brought together in what becomes the Chicago School of Economics.

He’s undoubtedly the head and leader of the Chicago School of Economics. There’s an earlier generation that he learns from, then his generation, and there’s also a Chicago School of Law and Economics that becomes profoundly influential. A third generation will be somewhat distinct from him but will go on to shape economics.

Let me go back to these pieces and start with the Great Depression.

Milton Friedman actually lived through the Great Depression. He was in college when it hit. He was in college from 1928 to 1932, and he was deciding whether he should study mathematics or economics.

He had had some good economics teachers, but it was really the context—the slow dissolution of economic prosperity—that affected him. He decided to go to Chicago and study economics.

What’s interesting is that the Great Depression was unexpected, unpredicted, and unprecedented. Economists were struggling to know how to respond to it. Friedman arrived at the University of Chicago when the field was struggling to know what to do.

He was in an open space where the institutional economics of the 1920s had failed to predict what was happening. Their big thing was charting and understanding business cycles, and then the biggest business cycle of all time arrived. They hadn’t seen it coming, and they didn’t have a good explanation for it.

What he got at Chicago was the remnants of a monetary understanding of the economy. His teachers didn’t know exactly what was happening, but they looked first to the banking crisis. In 1933, there were bank runs and failures—perhaps up to a third of American banks failed. Hundreds of banks were failing per week.

That was the first imprint the Great Depression had on him: it had something to do with the banking system.

The second imprint was that all of his professors were profoundly concerned about the social crisis. They wanted relief programs, and they wanted them immediately. They wanted bank regulation and financial reform. They were very active. This was not laissez-faire by any stretch of the imagination.

Friedman had that imprinting. By 1936 and 1937, the ideas of John Maynard Keynes from Britain, who had a different explanation for the Great Depression, began to arrive in American economics. They became profoundly influential among most American economists, but by then it was too late for Friedman. He already had a different perspective.

Keynesianism unfolded and led to more active federal government participation in the economy. What underlay a lot of that adaptation in America was the idea that capitalism had failed—that capitalism had revealed a profound flaw in its cycles of boom and bust, which created social instability and chaos. It needed to be tamed and regulated.

That became the baseline of politics in the United States: the understanding of the New Deal, the Democratic Party, and, to some extent, the Republican Party. Friedman was never quite sure about that. He had a hunch that something else was going on.

The other idea was that capitalism had gone through a phase transition. Maybe it had worked well while we had a frontier. The United States used to have a frontier—a place where Europeans hadn’t fully settled, while pushing out the Native tribes, which is another story. The frontier was considered the engine of economic growth, but now it was over and closed.

There was a theory of secular stagnation. To deal with secular stagnation, we would need a more active state.

Friedman was suspicious of all these assumptions. He had an idea that money was somehow important. He joined together with Anna Schwartz, who at that time did not hold a PhD and was working for the National Bureau of Economic Research.

They came together to study money in the U.S. economy. It took them 12 years to write the book. They released ideas and argued about them, and Friedman wrote papers and gave talks saying that money was really important. Nobody believed him. He was a crank.

Then, in 1963, he and Anna Schwartz published *A Monetary History of the United States, 1867–1960*. It’s about 800 pages, and it’s a reinterpretation of the history of the United States through money. The central character is money, whether it’s specie, greenbacks, or U.S. currency.

They have an entire chapter on the Great Depression. Anna Schwartz did most of the work. She went to banks and said, “Show me your books.” Then she added up, column by column, how much money was in their vaults, how much was on deposit, and how much was circulating.

They literally have graphs in the book showing how much money was circulating in the United States at different points in time. When they get to the Great Depression, they find that the quantity of money available in the economy goes down by a third.

In some ways, this is completely obvious because so many banks had failed, and there was no deposit insurance at that point. If your bank went under, your savings were there, and the money essentially vanished.

It was fractional-reserve banking. Banks could loan out perhaps 90% of their deposits. Friedman and Schwartz presented the argument that what really made the Great Depression so bad was this drop in the amount of money—a 30% decline they called the Great Contraction.

Then they went further and asked how and why this happened. They pinpointed the Federal Reserve, which was a fairly new institution at that time. What did the Federal Reserve do as the lender of last resort in the face of what they depicted as a massive, unprecedented liquidity crisis?

They found that the Federal Reserve wasn’t doing much. They dug into the details and found that the Federal Reserve had gone through a personnel change. Some of the key leaders of the 1920s, including Benjamin Strong, were deceased.

In their telling, the Federal Reserve Bank of New York was globally connected and had seen a lot of financial crises come and go. They believed that the New York Fed had understood that this was a liquidity crisis and that it should be generous and support all the banks.

But its influence had diminished, and the people in charge didn’t know what they were doing. The Fed pursued a policy of what they called “masterly inactivity.” They didn’t see it as their problem and didn’t do much.

There was an enormous liquidity crisis, and that was their version of what the Great Depression was about: a financial-system meltdown and a liquidity crisis. They made a strong counterfactual argument that the Federal Reserve could have prevented it, but did not.

That made it an institutional failure and a political failure, rather than a failure of capitalism as a system.

The book came out and was a blockbuster. Even economists who had thought Friedman was a crank began to say that Friedman and Schwartz were onto something. That changed the game.

It also became one of his most influential contributions because Friedman and Schwartz became a playbook for the Federal Reserve. We’ve lived through this ourselves with the financial crisis. The Federal Reserve is ready to lend and does all kinds of new things because no Federal Reserve chair wants to be in a “Friedman and Schwartz 2.0” situation, where somebody writes that they were the bad guy who let the economy melt down.

The specifics of what they say to do have evolved as the system has changed, but this is a playbook for how to deal with economic crises. It’s Friedman and Schwartz, and it’s absolutely fundamental.

That’s really where he made his mark.

There are a lot of things to say here. First, the book we’re talking about is *A Monetary History of the United States, 1867–1960*, for which Milton Friedman won the Nobel Prize.

You also mentioned the influence of the Great Depression. Could you rewind to that? He went to college at Rutgers?

That’s right.

He had mathematical proclivities and wanted to be a mathematician. It’s a cool crossroads. It’s interesting how the right person arrives at the right time.

You described it well: he had the choice of becoming a mathematician or an economist. Economics was at the University of Chicago, and mathematics was at Brown University. Whichever direction he chose, this was also the beginning of mathematical economics.

He fit nicely into the transition toward using more mathematics. I think you said that the number of equations per paper started going up, which is a nice way to put it.

He was the right person at the right time to try to solve this puzzle of the economy melting down. It’s fascinating to zoom in on a single human being making a decision about life while the world is melting down from an economic perspective—and deciding that he could do something to figure out what was happening, while also rejecting the mainstream narrative about why it happened.

There’s another piece of the puzzle. When he went to Rutgers, he thought he would become an actuary.

Milton Friedman’s parents were Jewish immigrants from Eastern Europe. They were atypical in that they didn’t stay in New York. They moved to Rahway, New Jersey, and put together a fairly middle-class life. They had a shop and did some wholesale buying and selling.

His father died when he was 16, and his life became more precarious, although it was never as precarious as he made it out to be. He had 3 older sisters who earned a good living. Incidentally, they all had better grades in high school than he did, but he was the one who went to college.

It was important that he lost his father figure because he was then looking for other father figures. He met 2 at Rutgers. One was Arthur Burns, who would go on to have a huge influence on his career. He was no relation to me, by the way.

Arthur Burns was, like Friedman, a Jewish immigrant boy. He was older and making a career as an economist. The other was Homer Jones, who had gone to the University of Chicago and studied with Frank Knight. Jones told him that he had to go to Chicago.

He had these 2 mentors. Burns, in particular, suggested that he could become an economist. The idea of being an actuary for an insurance company was something he had come up with as a person who was good at mathematics.

College opened his perspective and opened the door. It was important that he didn’t get an explanation of the Great Depression that he believed. He was looking for one.

The mathematics is also an interesting aspect of his career. He came to Chicago to study with the mathematical economist Henry Schultz, but he arrived and thought Schultz was unintelligent. He was incredibly arrogant.

Schultz had done important work in the early stages of mathematical economics, but many of the oral histories about him say that he wasn’t particularly bright. Friedman may have been right.

He fell into the group of students who were enthralled with his other professor, Frank Knight. Knight was opposed to mathematics in economics. He was a neoclassical economist, but not a mathematical economist. He was an old-school liberal, deeply concerned about liberal democracy and economic liberalism.

Friedman was deeply influenced by Knight, while continuing to pursue mathematical economics. For part of his graduate career, he went to Columbia University, where he eventually received his PhD. He worked with a mathematical economist there.

He came out trained in what would eventually become econometrics, statistics, and economics. His early publications were in statistics, but that wasn’t really where his intellectual heart and soul were.

Eventually, he turned profoundly against mathematics in economics and became a kind of heterodox figure throughout 20th-century economics. He argued that simple models were better, and that economists needed to work from empirical data rather than construct elegant models.

The test of a good model was whether it could predict things that actually happened.

It should predict things that happen. It should tie back to what’s going on.

I’m wondering which direction to go. First, could we zoom out on the different schools of economics? Just the basics.

You mentioned neoclassical economics, Keynesian economics, and the Chicago School of Economics. Where does Austrian economics fit into that? What about Marxist economics?

Could we linger on the basics of Keynesian economics, the Chicago School of Economics, neoclassical economics, and Austrian economics? There’s some overlap and tension between them.

We could start with classical economics. Adam Smith is the classic classical economist, the founder of the discipline.

Classical economics doesn’t really use mathematics. It’s very close to political economy. It’s concerned, as Smith puts it, with The Wealth of Nations. It’s concerned to some degree with distribution and with what makes a good political system.

What defines classical economics, when you look at it from a great distance, is what’s called the labor theory of value. Where does value come from? In classical economics, it comes from the labor a person puts into something.

This perhaps comes from Locke’s notion of property: you mingle your labor with the natural world. Classical economics is concerned with Smith’s argument against mercantilism and in favor of freer trade. It often goes by the name of political economy to show that it’s more capacious and is thinking about politics and economics together.

You can still read these books today. The sentences are long and the words are different, but you can follow along.

The major transition from classical economics and political economy to economics as it’s understood today comes with the marginal revolution. The marginal revolution is a scientific revolution that happens in several places simultaneously.

It’s one of those things you see in the history of science. There will be a breakthrough, such as Darwin’s, but somebody else has essentially the same breakthrough at the same time in a different place.

There’s a version of marginalism in the German-speaking lands, in the French-speaking lands, and in Britain. They all come together. The shift is in the theory of value.

The theory of value in marginalism is about the margin. Say you have 1 apple and want a second one. How much is going from 1 apple to 2 apples worth to you? Probably quite a bit. If you have 10 apples, going to 11 apples probably doesn’t matter as much. The marginal value is lower.

What marginalism does, most importantly, is open the door to mathematics in economics because you can graph it. You can depict the relationship graphically.

There’s interesting work in the history of economics showing that many people who developed marginalism looked to physics as a model. Physics was the queen of the sciences, and they imported terms from the natural world to describe the social world through economics.

One of those terms is equilibrium. The idea is that if you look at a market, it will reach equilibrium when everybody has bought and sold all that they want, or when the price settles at an equilibrium price where supply and demand match.

These are things we would learn in a basic microeconomics class. Marginal analysis is still the foundation of microeconomics.

In the German-speaking intellectual tradition, this becomes the root of Austrian economics. The people picking up the marginal revolution in the German-speaking lands are opposed to the historicists, who think more evolutionarily about how societies grow and change.

The historicists have a vision of economic ideas applying differently to different types of social arrangements. The marginalists, inspired by physics, believe these are natural laws that apply anywhere, to any kind of human society.

That’s the first major fissure we see again and again: are you historically minded? Do certain traits of economic life inhere in particular kinds of societies, or are there universal economic laws that flow through any type of society?

Marginalism initially uses geometry to graph things, but it also opens the door to calculus and mathematical models. At that point, in the late 19th century, a model is something like what a physicist does: imagine an inclined plane and calculate how fast a ball rolls from one end to the other.

It’s a physical representation of the world. Eventually, economists start to create mathematical representations of the world, but we’re not quite there yet.

We’re in the late 19th century, with the introduction of marginal analysis marking the transition from classical economics to economics.

Now we have economics, but we still have this fissure between historical thinking and what we might call natural-law thinking—physical laws versus contingency.

In the United States, this maps onto debates about capitalism. Historically minded economists tend to be interested in the Progressive Movement, which is invested in taming and regulating industrial capitalism and changing its excesses: factory-safety laws, wage laws, and laws governing working conditions.

American economists generally use marginal analysis, but they use it in different ways. Those more drawn to marginal analysis become known as neoclassical economists. They’re neoclassical because they use marginal analysis, and classical because they don’t think the way the economy or government operates needs to change. They aren’t Progressives.

The Progressives say that we need social control. The state and the people, collectively and democratically, need to control the way economics unfolds and make sure things are fair and equal.

That school of thought becomes known as institutional economics in the United States by the 20th century. It’s part of the Progressive Movement, from the late 19th century into the 20th century.

The institutionalists are much more Progressive, while the neoclassical economists are still there but very much a minority. Frank Knight, Milton Friedman’s teacher, is one of the minority neoclassical economists.

Is it fair to say that neoclassical and classical economists, versus institutional economists, disagree about how much government intervention there should be in the economy? Neoclassical economics favors less intervention, while institutional economics and the Progressive economists favor more intervention?

Yes, exactly right.

This is the situation in the 1920s. But the first generation of Progressive economists was very radical. They were closely allied with the Socialist movement and labor radicalism, and many of them lost their jobs at universities.

This connects to the early history of academic freedom. This was before academic freedom was established. They were pushed out and became much more mainstream by the time we get to the 1920s.

We don’t really have radical critiques of society coming from economists by then. Economics was a much smaller and less important profession than it is today. The 1920s were also a fairly peaceful decade in the United States.

This is the situation when the Great Depression hits. As I mentioned, the most important institutional economist was Wesley Mitchell. He had written an entire book on business cycles, but he didn’t see this business cycle coming and didn’t have a good explanation for it.

The preeminent neoclassical economist was probably Irving Fisher. Fisher was heavily invested in the stock market, and in late summer 1929 he said that stocks were going ever higher and would continue to do so forever.

He lost his reputation after the stock market crashed. Milton Friedman was stepping into a field in which the greats had been discredited, while an enormous economic crisis was unfolding around him. Everybody was struggling to figure out why it had happened.

He was also stepping into a world in which there was a great deal of anger at capitalism. In the United States, there were unemployed people on the street. In Europe and Asia, fascist movements were rising.

Everyone was concerned about this. Friedman saw much of it through the lens of Frank Knight, who felt that we might be reaching the end of what he called liberalism.

Knight called himself an old-fashioned liberal. He thought we might be reaching the end of representative democratic government because representative democratic government couldn’t solve these social problems.

Knight was very pro-capitalist, but he said that capitalism, as it had developed, was generating inequality and putting too much strain on the system.

Knight became one of the people who helped Friedman think through this question: how do I develop a new theory of capitalism that works in an era of mass democracy, where people can vote and express their unhappiness with what’s happening economically at the ballot box?

This larger movement, of which Hayek and Friedman were a part, became the early stirrings of an attempt to think about a new kind of liberalism, which would eventually be called neoliberalism.

Could we linger on the definitions? We talked about neoclassical economics and institutional economics. What is Keynesian economics? And the Chicago School of Economics is a branch of neoclassical economics that’s a little more empirical rather than model-based, while Keynesian economics is more model-heavy and favors more government intervention?

Yes. The real battle eventually becomes Keynesian economics versus everybody else. That’s what comes to pass in the United States and in the developed economics profession more generally.

The other piece of the puzzle is the introduction of mathematics. Mathematics had been around the edges, but it picked up speed in the 1930s. The Econometric Society was founded, statistical and mathematical tools became more common, and economists began using them more to think about economics.

They were given a boost, inadvertently, by the rise of Keynesian economics.

Keynes was trained in the neoclassical tradition. He was an absolutely fascinating figure. He had been at the peace negotiations at Versailles and essentially predicted World War II. He said, “We’re going to have another war caused by Germany because this peace treaty has been carried out in such a vindictive way, and people have made such bad decisions.”

When the Great Depression unfolded, he came up with a new theory to explain what was happening.

The previous neoclassical understanding was that things go up and things go down, and when they go down there’s a natural mechanism to bring them back up. When the economy goes down, prices and wages go down. Firms realize they can hire people cheaply and buy things cheaply. They don’t have much competition, so maybe they should get back into the game. Others then follow, and prosperity regenerates.

Keynes said that was one theory, but something different was happening. The working class was more empowered and would not simply accept low wages and allow them to fall to the floor.

He also said people might become too anxious to spend. They might not want to invest. Keynes discussed “animal spirits.” He was still enough of a political economist to think not only in terms of human rationality, but also in terms of other things happening within human beings.

People might decide to sit on their money rather than invest it. If that happens, you could get stuck in a bad equilibrium. In the neoclassical model, the equilibrium restarts and resets itself. Keynes said we could get stuck in a depression.

In that case, the government would have to stimulate investment and invest itself. His student Richard Kahn argued that when the government invests a dollar, it has a multiplier effect. A dollar spent by the government ramifies throughout the economy.

That puts the government at the center, as opposed to the banking or financial system, which would be more characteristic of Friedman’s analysis.

For many economists of Friedman’s generation, he was part of a strange generation because it became dominant. The men who became Keynesian economists were only about 4 years older, but those 4 years were important. They entered graduate school in economics and were exposed to the new ideas of John Maynard Keynes.

Paul Samuelson called it something like a South Sea virus: all the younger economists immediately succumbed, and no one over 50 got the disease because their thinking was already set.

Keynes himself was suspicious of mathematics in economics. Friedman is fascinating because one of the first books by Jan Tinbergen, a Dutch economist, to use mathematics in economics came out in 2 volumes. Keynes praised the first volume, and Friedman praised the second. They were on the same page in that respect.

But as Keynesianism arrived in the United States, Franklin Roosevelt was not really a Keynesian. He was an accidental or experimental Keynesian. There were many ideas in the United States that were similar to Keynesianism without being theorized, including the idea that the government had to do something.

All of this came together. American economists realized that they could construct models from a Keynesian perspective. If they could put numbers into these models, they could go to Washington with numbers and seem to have much more authority.

Mathematics became twinned with Keynesian economics. Numbers became a symbol of expertise: “We know what’s going on because we have numbers.”

You could create a model, set the interest rate and taxes at particular levels, adjust government spending, and get an estimate of predicted GDP.

The other piece of the Keynesian revolution was that it got people thinking holistically about the economy as a single conceptual unit. Paul Samuelson eventually called this the neoclassical synthesis.

This still exists in economics today. If you take microeconomics, you get supply and demand, scarcity, and marginal analysis. If you take macroeconomics, you get a very different, more Keynesian approach.

The idea is that the way things behave individually can be very different from the way they behave when added together. Economists use neoclassical tools to analyze individual and market behavior, but they shift to a different paradigm when they think about the economy as a whole.

In that paradigm, the federal budget and the taxing and spending power of the federal government become paramount. That’s called the fiscal revolution, and it’s really the essence of Keynesianism.

The important thing to remember is that Keynesianism and Keynes are different. There’s a famous episode where Keynes came to Washington, went to dinner, and later told one of his friends in London, “It was really interesting. I was the only non-Keynesian there.”

Keynesian economics favors more government intervention and fiscal policy, putting the government at the center of influencing the economy. The different flavors of Austrian economics and the Chicago School say that we should have less government intervention and trust the market more.

For Friedman, the formulation is to trust the money supply—or at least to focus on the money supply.

The Austrians and the Chicago School see economic prosperity and growth as coming from individual initiative, individual entrepreneurship, and private sources. The private market drives economic growth, not the public sector.

For Friedman, the question is what the role of government should be. Because he lived through the Great Depression, he wasn’t laissez-faire, and he never would be.

Interestingly, Hayek was laissez-faire at first. He said, “Let it rip.” Things got so bad that Hayek eventually decided that wasn’t going to work.

Can we define laissez-faire? What do we mean by the free market? What’s the extreme version?

Laissez-faire means “leave it alone” in French. It’s more often used as an insult than as an actual position. Very few people are completely laissez-faire.

The pure laissez-faire position might be an anarchist position: the state does nothing, or the state isn’t even there.

If I could make it more precise, freedom of contract would be essential. The buyer and seller of labor must have absolute freedom to contract. That means no minimum-wage law, no working-hours law, and no employment law.

Imagine you’re in 19th-century America, you have a farm, and you hire someone to help you. You offer the money and they take it. If they fall off a ladder and break their back, maybe you help them and maybe you don’t. There isn’t an entire apparatus of legal liability and safety.

Another piece of laissez-faire would be free trade among nations. There would be no regulation of who could invest in a nation or who could take money out of it. Nippon Steel could invest in U.S. Steel, and there would be no grounds to reject that.

As a billionaire in the United States, you could relocate yourself and all your money to another country, and the United States couldn’t try to keep you. Nobody else could stop you from coming in.

In the context of an economic crisis, laissez-faire would not include centrally provided relief. In pure theory—although it’s very seldom applied purely—wages need to fall far enough and people need to become desperate enough to start taking work and restart the machine.

The theory would be that if you give people relief, they might not go back to work. Almost nobody said that during the Great Depression because the situation was so bad. People were starving in the streets, and for humanitarian and ethical reasons it wasn’t acceptable to say that.

Hayek, though, along with Lionel Robbins, initially said that this was a business cycle that needed to run its course and that intervention would be detrimental. That position didn’t last very long. It’s not a position you can hold for long, although perhaps you could hold it during other cycles.

Ludwig von Mises remained much more hardcore and wasn’t open to things like unemployment insurance or other state-based interventions.

What did von Mises say about the human suffering witnessed during the Great Depression? What were economists and policymakers supposed to do when people were suffering at scale?

I wish I knew the answer to that. I don’t know enough about von Mises’s reaction during the Great Depression.

I would hazard that he would look further down the road and say that if you start here, you’re going to end up in places that are bad. But I don’t know factually what he said in response.

I do know that Hayek’s position didn’t last very long. It’s not a position you can hold. It might be possible in other business cycles.

Another interesting thing is that I found very few Americans saying this. Most of the people who did were small-town elected officials. The most famous was Andrew Mellon, although we don’t have him directly on record saying it. Herbert Hoover quoted Mellon in his memoirs as saying something like, “Liquidate real estate, liquidate stocks, purge the rottenness out of the system, and people will live a healthier life.”

There were also members of the Federal Reserve who felt that intervention would create what we now call moral hazard. Failing banks needed to be taught a lesson and disciplined. A lot of people saw the crisis in terms of discipline.

If you remove that discipline, they thought, you’re taking away something fundamental from society.

Milton Friedman never went all the way to laissez-faire?

No, he didn’t.

What’s interesting is the number of radical proposals that he and his teachers were floating. I mentioned Frank Knight. Another important influence on Friedman was Henry Simons, a junior professor at Chicago.

Simons had an idea called “100% money.” It would have been a law requiring banks to hold 100% of the deposits they received. They couldn’t loan out those deposits on the margin. This would have completely overhauled the U.S. banking system.

There would be one category of institutions called banks, where you deposited money, and another category of investment vehicles that invested money. That was similar to what happened in the banking reforms of the 1930s, when investment banks were separated from deposit banks, and deposit banks were more highly regulated and supported by the FDIC.

The Chicago School had radical proposals for reform: going off the gold standard, restricting the currency, changing the banking system, and providing immediate relief payments.

But they thought of these as emergency measures to get through an emergency, not permanent alterations in the state of government or the relationship between state and market.

The Keynesian assumption was that times had changed, that we were in a new dispensation, and that we needed a new relationship between state and market.

Friedman was open to doing things differently in a state of emergency. He had different ideas during World War II than at any other time. That’s why I argue he would have supported at least the first rounds of COVID relief, because he would have put on his emergency-thinking hat.

He was definitely more flexible in that way.

You mentioned Hayek. Who was he, and what was his relationship to Milton Friedman in the space of ideas and in the context of the Great Depression?

Friedrich Hayek was an Austrian economist who took a position in London. He was a mentee of Ludwig von Mises. He wrote about business cycles, Austrian capital theory, and the Depression.

He was one of the few economists who, in the beginning, wasn’t calling for much intervention. As he realized how politically unpalatable that was, he developed a softer version of Austrian economics with room for a range of social services.

What’s significant about Hayek is that he was watching what was happening in Austria and Germany. He was worried that the same thing would happen to the Western democracies.

He saw the root cause as socialism—the shift toward an expanded role for government that was happening in the United States and Britain. He wrote the book The Road to Serfdom, which became incredibly famous.

The basic argument was that taking steps toward a planned economy, or an economy that was a modified form of capitalism, could lead to a coercive, totalitarian state. He was very clear that this wasn’t inevitable, but that if people took the same steps and followed the same line of thinking, it could happen.

The book became enormously popular in the United States. He was already in close contact with Friedman’s teachers before it came out. Frank Knight and Henry Simons were in touch with him. They saw themselves as liberals—old-fashioned, unreconstructed liberals.

Even before Hayek became famous, he tried to organize thinkers and intellectuals who shared what we would now call classical-liberal values and create a counter-consensus to the one that was forming.

Hayek also chose not to argue against Keynes, which he later saw as a huge missed opportunity. He thought he should have staked out the case against Keynes, and that by not doing so, people came to believe there was no case against Keynes—that Keynes was literally unanswerable.

Hayek had this great regret. He channeled some of it into community building, specifically through the Mont Pelerin Society.

It fell to Friedman to really make the case against Keynes, but Hayek ended up at the University of Chicago and profoundly influenced Friedman’s thinking about what he called the competitive order.

Hayek argued that the state could and must maintain the competitive order: the system of laws, norms, and practices that makes it possible for markets to function.

That was one of the key differences between the older philosophy of laissez-faire and the newer reconceptualization of liberalism. The newer view said that we need a state, but a state that doesn’t intervene in markets according to social-democratic principles. Instead, it structures and supports markets so they can function with maximum freedom.

It also recognized that if there aren’t basic social supports, the market may generate the kind of inequality or social instability that causes the entire system to be questioned.

Hayek was important in promoting this modified liberalism. But although he had been a prominent economist in the 1920s and 1930s, mathematics became the language of economics and he was left out in the cold.

Friedman was somewhat left out in the cold too, but at least he had proved himself as a mathematical economist. He knew what the mathematical economists were doing and was rejecting it from a position of expertise.

He literally drove the mathematical economists out of Chicago. They were clustered in a group called the Cowles Commission, and he made their lives so difficult that they fled.

When Hayek arrived at the University of Chicago, he wanted to be considered for a position in the economics department. Milton Friedman said, “No way. You’re not really an economist because you’re not empirical. You just develop theories.”

Friedman appreciated Hayek as a social thinker but not as an economist.

His answer to Keynes would be deeply empirical, but also theoretical. He would create an alternative intellectual world and approach for economists who weren’t satisfied with Keynesianism.

Almost single-handedly, Friedman introduced ideological and political diversity into economics. From his beachhead in Chicago, he developed the theory of monetarism.

The easy way to summarize monetarism is with Friedman’s famous dictum: “Inflation is always and everywhere a monetary phenomenon.”

It’s fascinating that he became an expert in inflation because his first major research product was A Monetary History of the United States, which is fundamentally a theory of deflation—all prices going down.

He went back to an idea that Irving Fisher had popularized, but that was almost an old truism: the quantity theory of money. It says that the price level is related to the amount of money circulating in an economy. If you have more money, prices go up. If you have less money, prices go down.

This seems basic, almost too basic to bear repeating, but Friedman argued that this relationship held even in an advanced industrial economy. That was what people had started to doubt.

If you think about money, you think about banks, not necessarily the federal budget, spending, and taxation. Before the Keynesian revolution, economics textbooks spent a lot of time on money and interest rates.

After World War II, the word count for money plummeted, while words like taxation and budget increased. The economics profession shifted its attention away from money, and Friedman was one of the few people saying that money still mattered.

It was a counterintuitive and historical argument. With Anna Schwartz, he developed a 150-year analysis. He also had students working on episodes of hyperinflation in different periods, and he looked back to ancient history.

He said this was a law of economics, something that recurred throughout time. It wasn’t merely historical or contingent; it was an economic law.

Keynesians argued that this wasn’t relevant anymore. In some ways they had a point. To pay for World War II, the federal government sold a lot of bonds and issued a lot of debt. It wanted to pay the debt back at low interest rates and keep people buying it.

The Federal Reserve had been discredited by the Great Depression, so the Treasury essentially ran it. The Treasury told the Fed to keep interest rates low.

The Federal Reserve stopped being an independent entity and became almost a department of the Treasury. In 1951, the Treasury-Fed Accord restored the Fed’s independence, but it didn’t really use that independence.

Most economists were observing a regime in which the Federal Reserve had little power and inflation was low. The inflation that did occur was mostly a brief burst during the Korean War.

They concluded that inflation wasn’t important or relevant, and that money wasn’t important. Friedman had to break through that consensus.

That’s why he and Schwartz turned to history. They could make the argument historically.

Friedman then wrote papers showing that when he mapped economic fluctuations against fluctuations in the money supply, they fit together. Other economists were building complicated mathematical models. Friedman was doing extremely simple things, and they thought it was dumb and uninteresting.

After A Monetary History of the United States, they had to pay attention. Friedman spent those years hammering away at monetarism.

At the same time, he became a public supporter of Barry Goldwater in 1964. Keynesian economics had found a home in the Democratic Party. Its brightest moment in the sun was probably the administration of John F. Kennedy, who brought many Harvard and Yale professors into the Council of Economic Advisers and proposed spending programs guided by Keynesian philosophy.

Barry Goldwater was tremendously controversial, in part because of his votes against civil rights, which Friedman strongly supported, and in part because Friedman was a hardcore libertarian at a time when that wasn’t politically mainstream.

Friedman became an outcast and a pariah among the educated people around him. That affected monetarism because people felt it had become a package deal with his politics. There was a reluctance to embrace his economic ideas because it seemed as if doing so required embracing his politics.

His economic ideas became associated with conservatism. Conservatism in the United States became a political brand containing elements recognizable across time and space—an embrace of tradition, comfort with hierarchy, and so on—but it also acquired something new: Friedman’s ideas about freer markets, less government regulation, and the benefits of capitalism and freedom.

Those ideas were folded into American conservatism partly because Friedman was such a powerful intellectual figure. After his advocacy of Goldwater, the media realized that he was very smart, had interesting things to say, made great copy, and made a great guest.

He began writing a column for Newsweek magazine, which was a major deal in a much more consolidated media environment. He was quoted in all the newspapers, and his public profile rose as he pushed monetarism.

There’s a fascinating, complex dynamical system of people contracting with each other in this beautiful way. There are so many questions I want to ask about the nature of money.

For Milton Friedman, trusting the flow of money is really important, and the signals that pricing and money provide are important.

Some of that goes back to Frank Knight. One thing Knight said to all his students was that the market is the best allocation mechanism we have. The market allocates scarce resources better than anything else.

Hayek added that prices are information signals. A price sends information to buyers and sellers about how they should act.

These are 2 of the strongest arguments for why the government shouldn’t intervene in the price system: intervention blurs information, or allocates less efficiently than the market.

Friedman adds another level by thinking about the whole economy and how money circulates through it.

He and Anna Schwartz construct what are called monetary aggregates. They add together the money deposited in banks and the money circulating in people’s wallets.

You have to go back in time because there were no credit cards. The stock market was tiny in terms of the number of people who invested. There were no mutual funds. When travelers’ checks were introduced, it was a major event.

The monetary system was much simpler. Schwartz and Friedman measured what they called the monetary aggregates. They focused on M1 and M2, and their favorite aggregate was M2, which encompassed deposits and circulating media.

There were distinctions between money in savings accounts and money in checking accounts. Savings accounts could earn interest and were generally believed not to circulate. Checking accounts didn’t bear interest and were thought of as circulating. There were also different institutional structures, such as postal savings banks and credit unions.

Friedman shifted the focus to these aggregate amounts of money and argued that they had a great deal to do with economic booms and busts. When the available money expanded, economic activity expanded. When available money contracted, economic activity contracted.

At this stage, the government could use the Federal Reserve and its influence on interest rates to make money cheaper and more available, or more expensive and less available.

The central idea of monetarism is that it can be very dangerous if the government hits the gas, then hits the brake, then hits the gas again based on what a politician or someone at the Federal Reserve wants. That creates instability.

One of the core policy proposals of monetarism was to grow the money supply at a steady rate. At first, Friedman simply said “k percent.” He didn’t put a number on it because he said the number didn’t matter. What mattered was the steadiness of the growth rate.

If the growth rate were steady, inflationary expectations would fade away and people would make economic decisions based on fundamentals, rather than on what they thought was going to happen or on hedging against inflation or deflation. They would simply be able to function.

That’s the paradox of monetary policy. When it’s working, you don’t see or notice it. When it’s working incorrectly, Friedman argued, it can destabilize everything. It can cause a Great Depression or an artificial boom.

Friedman was making this argument at a time when the Federal Reserve was a mysterious and secretive organization. It wasn’t well known or deeply appreciated. Some of the only people who appreciated the Fed’s power were hardcore rural populists who saw banks and money power as the problem.

Friedman initially had no constituency for this policy or analysis. He had to build one.

How epic is it to develop this idea, hold onto it, and then convince the United States that money matters—something we now believe is mostly correct?

It’s an idea that went against the experts, eventually won out, and drove so much of the economy of the most powerful economy in the world.

That is a fascinating story.

Friedman advanced all these ideas, roiled the economics profession, built a political profile, and eventually became president of the American Economic Association. In that role, he was asked to give the presidential address.

He gave the address in December 1967. He said he was going to talk about inflation and the tradeoff between inflation and unemployment, which was generally known as the Phillips curve.

The Phillips curve in its original form was derived from post-World War II data—about 12 years of data—and showed that when inflation went up, unemployment went down.

It seemed to make sense. As the economy heated up, more and more people were hired. The relationship led policymakers to think that inflation could sometimes be good. If you wanted to lower unemployment, you could allow inflation to rise a bit.

In its crude form, the Phillips curve became a menu. You could put your desired unemployment rate into the model, and it would tell you how much inflation to accept.

Friedman stood up and said this was wrong. It might work in the short term, but it wouldn’t work in the long term.

In the long term, inflation has momentum of its own. Once it gets going, it tends to build on itself. This was the accelerationist thesis.

Workers go to the store and see that prices have risen. They ask for higher wages. Eventually, wages go up too much, and companies decide that they can’t hire as many workers at those wages. They lay workers off.

If inflation continues, it will eventually result in high unemployment. Theoretically, you could end up with high inflation and high unemployment. That hadn’t been seen before, but Friedman said it could happen.

He then said the government had begun expanding the money supply in 1966, so there would be a lot of inflation and then a lot of unemployment. He estimated how long it would take and said it would take about 20 years to get back to normal.

He predicted the stagflation of the 1970s.

Stagflation is high unemployment and high inflation. For an economist, was that a direct attack on the mainstream belief represented by the Phillips curve, and did it also disprove the inverse relationship between unemployment and inflation?

Yes. What made it happen was that many of the economists who most deeply disliked Friedman and his politics began running their models in the 1970s and saw that he was right.

A parallel process happened in Britain, which was going through a similar burst of spending and inflation. Friedman was vindicated in the way he said would be the ultimate vindication: his theory made a prediction, and the prediction came true.

That prediction of stagflation was the final breakthrough for his ideas and their importance to policy and to thinking about how to intervene in the economy.

It also changed the understanding of the role of the Federal Reserve. Friedman had been saying that the Federal Reserve was incredibly powerful, and finally people began to believe him.

The Phillips curve still exists. It has been augmented by expectations and remains relevant in the short term. But Friedman’s warning is still apt: if you focus too much on unemployment, you can let inflation out of the bag.

Until recently, the Federal Reserve tradition focused on inflation, believing that controlling inflation was fundamental and would keep unemployment low, rather than trying to lower unemployment at the cost of higher inflation.

Can we go back to Frank Knight and the big-picture question we started with—the justification of capitalism?

As you mentioned, Milton Friedman searched for a moral justification of capitalism. Frank Knight was a major influence on him, including on this topic. I think Knight’s case for capitalism was grounded in the idea that the ability to act in the face of uncertainty creates profit, and it should, because taking risks should be rewarded.

How does the idea that taking risks in the face of uncertainty should create profit become a justification for the ethic of capitalism?

Knight was asking where profit comes from. In his view, it comes from the entrepreneurial and risk-taking functions. He wove that into an argument for why capitalism works best, why it’s the most effective allocation mechanism, and why it assigns responsibility in a way that socialism never could.

Knight wasn’t a booster of capitalism, though. He was a darkly pessimistic and depressive person, and he was afraid capitalism would collapse and socialism, fascism, or communism would take over.

He believed that capitalism was generating inequality and that this was putting too much strain on the system.

Friedman, as the more optimistic figure, believed with Hayek that it was possible to develop a different approach to capitalism—one that preserved the price system and allocation, but built in social supports and a social minimum.

There was a moment in Friedman’s career when he was struggling to figure out how to make the case for capitalism. The people who would later become the conservative movement were also struggling to make that case.

He began thinking that capitalism works because if you put forth effort, you get a reward. You could say that people get what they deserve under capitalism.

Then he stopped and realized that wasn’t really true. We’re born with different endowments, and there’s a huge element of luck. Some people are in the right position and some aren’t.

If he said capitalism was moral because people got what they deserved, that wasn’t really true. He also had an ethical reaction—he called it an aesthetic reaction. It simply didn’t feel right to say that.

He struggled with what to say, and eventually concluded that capitalism couldn’t be the core of your ethics. The market couldn’t be the core of your ethics. It had to be something else.

He decided that individual freedom was the ethical core. Capitalism makes individual freedom possible because capitalism is dedicated to maximizing it.

At that point in history, he could set aside Knight’s concerns about inequality and say that when he looked at the data, especially macroeconomic data over a century, incomes were converging.

Historically, when a country moved from a feudal or agrarian society to a more market-based society, incomes converged. They might begin to diverge later, but Friedman was living in the moment of convergence.

He believed capitalism could be justified through the ethic of freedom. He also believed inequality could be addressed through specific policies and wasn’t a fundamental feature of capitalism.

He didn’t see capitalism as an engine of inequality in the way Frank Knight did, or in the way some critics on the left do.

How did Friedman conceive of freedom? Individual freedom, economic freedom, political freedom, civil freedom—what was the dynamic between those different freedoms?

He began by focusing on economic freedom. He thought it was important because the United States didn’t value it enough.

By economic freedom, he meant the ability to keep what you had earned, make decisions about your business, and make decisions about the work you did.

That translated into ideas such as opposition to a minimum wage. He believed the minimum wage had bad social effects, but also that people should be free to accept a job at a wage they themselves determined was acceptable.

He believed there should be minimal regulation of safety and other matters because the market would ultimately punish an unsafe product. If you created an unsafe product, it wouldn’t sell, and that would be your incentive.

He centered economic freedom because he thought, especially from his vantage point in universities and in the liberal consensus of the 1950s and 1960s, that economic freedom had been undervalued in America.

He took political freedom for granted. Later in his career, when he became famous and traveled the world, he spent time in Chile, which was ruled by the dictator Augusto Pinochet.

Pinochet began introducing economic freedom, but there was no political freedom. Friedman believed the 2 would eventually go together. He told Pinochet that economic freedom would eventually bring political freedom.

Pinochet wasn’t interested in that. He wanted to know what to do about inflation.

When Friedman left Chile, he was attacked and vilified for having supposedly supported the regime. He hadn’t supported it, but he realized that he had talked too much about economic freedom without talking enough about political freedom.

He had assumed political freedom because he came from the American context. He began recalibrating the relationship and saying that without political freedom, you could never hold on to economic freedom.

He came to see that the 2 needed to go together, but didn’t naturally go together. He became more explicit about political freedom.

At the end of his life, he witnessed the emergence of what we call the Asian Tigers: capitalist economies that were doing very well without political freedom.

He observed that they didn’t have political freedom. You couldn’t vote in a free and fair election. But they also didn’t have a secret police state or a KGB. They weren’t hauling people away for their opinions.

He said they had something called civic freedom—a sphere of debate, discussion, and interpersonal relations, even though people couldn’t participate politically.

That was a late-in-life addition, and I don’t think it was fully theorized. It shows that during the Cold War, he believed economic and political freedom, capitalism and democracy, and the United States all went together.

At the end of his life, he saw the emergence of different social systems using markets, trade, and market allocation without giving people similar freedoms. He was puzzling over that.

He always believed China would democratize. He thought China was on the path to democratization, partly because Chile eventually democratized. Pinochet was voted out, and Chile became a democratic, capitalist, prosperous country.

Friedman thought the same thing would happen in China. He saw Tiananmen Square but didn’t live long enough to see the China we have now, where political or civic freedom doesn’t appear to be coming anytime soon.

He also opposed China’s dual-track system, meaning that the market is bottom-up while the government is top-down. He thought you couldn’t have both.

He thought eventually the market would triumph.

It’s a powerful idea: maybe there’s no political freedom now, but if you hold on to economic freedom, eventually that will produce political freedom. Is that what he believed—that you begin with economic freedom and political freedom will take care of itself?

That’s what he believed, although it’s more complicated than that. People who benefit from economic freedom could decide to collude in a system without political freedom. That’s certainly a possible scenario.

But that was connected to his core idea of freedom and his belief that people want freedom and are drawn to it.

Going back to Frank Knight, he wrote an essay called “The Ethics of Competition.” The metaphor was that economic life is a game, and perhaps society as a whole is a competitive game. Milton Friedman appreciated and adapted some of this.

Can you speak to that metaphor?

The metaphor of the game asks, “What are the rules?” It focuses on the rules that keep the game going.

Knight didn’t use the concept of an infinite game, but I think that’s an interesting idea: a game in which all the players participate and which keeps going.

That helped Knight and Hayek shift from the question of allocation—who gets what and whether things are allocated fairly—to the more structural question of what rules we need to keep the system going.

For a while, that led to discussions of monopoly. We need rules against concentration. We need the rule of law. Everyone needs to be treated equally. People need to know what they’re up against.

Going back to monetarism, its core is a rule that Friedman called a monetary growth rule. What keeps the economic game going is a rule about how much the money supply grows.

Everybody knows the rule. Nobody is guessing, and nobody is changing the rules to help their side or the people they’re friendly with. The rule is clear and easy.

That emphasis on rules runs through Hayek’s competitive order, the monetary growth rule, and modern monetary-policy rules. We haven’t abandoned discretion, but rules are used as a heuristic or a check. Those ideas come out of Friedman’s thinking.

It’s profound, and it was always counterposed to discretion. Friedman worried that discretion would be subject to capture or political corruption.

If you have discretion in these major areas, people may stop competing in the market and instead turn their attention to controlling the rules or the rule-makers.

If there are clear, transparent rules, then you’re free to play the game.

Exactly. But depending on the rules, the game can have a different equilibrium. That speaks to mechanism design and the design of the rules.

This was another distinction between neoliberalism and classical liberalism. There was more focus on the rules needed to create the competitive order, how to design it, and how to build in social safeguards.

The shift toward monetary policy and stable monetary growth became important in the post-1970s era as one of the basic rules for how a capitalist economy should function.

It became especially important when people looked at countries in Latin America where monetary rules weren’t followed, governments played politics with their currencies, and the result was enormous upheaval, social loss, economic loss, and disaster.

My friend Liv is a poker player and philosopher of sorts. She has a podcast called Win-Win, which everybody should listen to. The purpose of the podcast, and her whole way of being, is to find win-win solutions.

Do you think economic life has win-win solutions? Can we find rules where everybody wins, or is it always zero-sum?

I definitely believe in win-win, but with a big asterisk. You can have win-win, but it can feel like win-lose.

It’s not only about whether people are getting more. It also has to do with whether people feel they’re getting more and whether they feel they’re getting what’s fair and equal.

If you look at the history of Chile, for instance, you see steady growth, steady income growth, and a steady reduction of inequality, but also a high level of discontent and a widespread belief that society is corrupt and unfair.

That’s what matters. How people feel about the system and perceive it matters. You can’t simply come out with statistics and tell people they’re winning if they feel like they’re losing.

That connects to all the nonrational and comparative factors people use when thinking about where they are relative to others. We’re incredibly social creatures. We’re attuned to our status, to rising and falling, and to where we sit relative to others in society.

That has to be attended to. It can’t just be an economic analysis.

The experience of the economy is different from the reality of the economy. On the topic of corruption, the reality of corruption and the perception of corruption are important in many nations.

Take Ukraine, for example. The perception of corruption has a major impact on the economy. You don’t want to invest; you’re cautious as a businessperson. The reality of corruption could be very different from the perception, but if narratives take hold, it becomes a self-fulfilling prophecy and affects the psychology of everyone involved.

This goes back to Keynes’s analysis of the Great Depression. If people won’t invest, if the investing class is spooked, you can be in real trouble.

In some ways, the simple analysis of the problem and the proposal of a solution were enough to restore the path to economic prosperity. That’s Franklin Roosevelt saying, “The only thing we have to fear is fear itself.” The sense that we have a future and can be optimistic helps people believe in it.

To go back to money, money works because we all believe in it. It’s a form of social trust and faith in our society and in the people in it. When that breaks down, the monetary system breaks down as well.

Did Milton Friedman think about how to control the psychology of humans at scale?

Not exactly. What’s interesting is that in his later work he talked about fiat currency as an experiment. We didn’t know how it would turn out, although it was turning out well at the time.

We had always had some form of commodity-based or commodity-backed currency. This was the first time we had moved away from that. He said that we didn’t really know how it would turn out, although so far, so good.

He also understood that if he designed a different monetary system, it would have to be tempered by history. When he looked at the historical record, he saw that monetary systems had always incorporated the role of the state because money was so important to people.

Could we talk about the tension between how much government intervention is acceptable for Milton Friedman? He opposed the minimum wage but supported a guaranteed minimum income. Can you explain the difference?

That was one of the discoveries I made in my research. I found a paper from 1938 in which he advocated what we would call a universal basic income, or a minimum income.

He saw this as part of the effort to create a new liberalism. He said that we had advanced, prosperous societies and had decided, in keeping with our morals and ethics, that people shouldn’t starve in an advanced society.

The question was how to make that happen. He believed the best solution was to put a floor under everybody.

You could determine the payment based on income. If you had a lot of income, you would receive nothing. If you had a little income, you might receive a little. If you had no income, you would receive enough to get by.

Initially, he thought this should be based on what was required to buy food. You could objectively determine the nutritional requirements and the price of food.

For him, this was important because it was consistent with a liberal polity. It didn’t intervene in the price system or economic relations, and it didn’t require a bureaucracy to administer.

You didn’t qualify because you belonged to a protected class. You received it simply as part of your membership in the general citizenship.

That was very different from a minimum wage because it didn’t interfere with the labor bargain.

His belief about minimum wages was that they priced unskilled labor out of the market. What an unskilled laborer had to offer was a willingness to work for a low wage. If you set the minimum wage too high, businesses wouldn’t hire that higher-priced labor.

They might use an electronic checkout system or something similar where the labor was no longer needed.

There’s an ongoing debate about what minimum wages do. There seems to be a level at which they don’t have that perverse effect and may create workers with more spending money, which then powers the economy.

Friedman had a classical rather than empirical analysis of the issue, but the minimum income is fascinating because it seems leftist to us while being purely individualistic.

It never really happened in its pure form because American social policy typically identifies a group of people as deserving. Soldiers and veterans are a classic example; mothers raising dependent children are another.

Those people deserve money, while everyone else is told to go out and work. Friedman’s proposal had no litmus test, no income analysis, and no targeted group. Everyone would receive the same amount.

The idea eventually went nowhere, but it did come to pass in the form of the Earned Income Tax Credit. It was run through the tax system. People who didn’t pay income taxes received a rebate.

Policy analysts consider it extremely successful. It does what it’s supposed to do and isn’t very expensive.

I see that as a paradigm of Friedman’s thinking. Instead of creating a bureaucracy to redistribute income or intervening in the labor market or housing market, you provide a cash grant that people spend themselves.

Interestingly, that’s what happened during the emergency of COVID. That model was followed: get money out quickly.

There’s still a debate about whether a universal basic income should be implemented. I think it’s always going to be difficult because Americans and their elected representatives don’t want to provide a universal benefit. They want to provide a targeted benefit because they believe there’s a moral component.

Friedman advanced a policy that was abstract, pure, and devoid of judgment, but also impractical. It focused on not interfering with the market or the signals the market provides. It was fundamentally opposed to price controls.

You could ask how this doesn’t interfere with the market. If you provide people with a minimum income, doesn’t that change their incentives to work?

There’s a large body of research on this. Most of it seems to show that it’s much better than the current benefits cliff, where you have to stop working to retain your benefits.

Any incentive effect on work seems to be much lower than expected. I’ll let the economists and social scientists fight that one out and figure it out empirically.

There have been a number of studies. It’s interesting even how you conduct studies like this and how you design experiments, especially if you’re empirically minded.

Many of the studies I saw were pretty small. How do you draw large conclusions about how to run the world and economies from such small studies?

It’s all a fascinating experiment in ideas.

You call Milton Friedman the last great conservative, which is controversial and makes a bold statement. What do you mean by that, and what makes a great conservative?

I was thinking about it in terms of American political identities, especially the 20th-century conservative movement.

People always say, “This isn’t conservatism.” In America, conservatism is different. Since the 20th century, American conservatism has included a major libertarian, pro-capitalist, anti-government component.

Critics say conservatism is about conserving institutions and practices, and that it has a role for the state and organic community. But in the United States it has always included an anti-statist component: let the market operate and don’t worry about what it does to established traditions. The market is our tradition. Capitalism is our tradition.

That synthesis included many people, but Friedman’s importance, his books, Capitalism and Freedom, Free to Choose, and the television series he made were core components of American conservatism as it evolved.

I see that political synthesis as having broken down. It has scattered into different pieces, and we don’t know where they will come together again.

Friedman’s push for open global markets and unfettered free trade is receiving pushback from both the left and the right. That’s a major sign that both parties have turned away from his vision.

I don’t know what they’ve turned toward, but the way Friedman brought these pieces together belonged to a political moment that has passed.

There’s another way in which I think of him as a conservative. Within economics, he went back to the older idea of the quantity theory of money and said that it still had value and could be applied to the modern day.

He also pushed back against the trend toward mathematization. He kept writing books that people can still pick up and read, whereas much of the output of economics is unreadable unless you’re in the field.

The work he and Anna Schwartz did—the literal recounting of events and deep analysis of data—was completely unfashionable at the time. We’ve returned to it with big data and computers, but he helped preserve that tradition.

If you think about the mode of his thought, he was intellectually conservative. A great conservative takes older ideas and makes them fresh for a new time period. That’s exactly what Friedman did.

You’ve also spoken about how, when Friedman was in public, there was a more open battle of ideas. Conservatism had William F. Buckley, and there was a vibrant, deep debate over ideas.

It seems less deep now.

That’s the thing that’s hard to explain, especially to students I teach today. There were arguments about ideas, and conservatives won a bunch of them.

That happened in the late 1960s and 1970s. One set of arguments concerned economics. The idea of stimulating the economy by spending more had a downside called inflation. There was also too much regulation, which had bottled up the sources of economic growth and dynamism. Those needed to be freed.

There was also a critique of social policy. The Great Society had ideas for ending poverty, and people analyzed them and argued that the programs weren’t helping. In some ways, they had created mechanisms that trapped people in poverty.

If people received benefits and lost them when they started to work, the programs created perverse incentives.

These ideas were fought out. They were empirical, controversial, and based on deep research and argumentation.

It seems that era has passed. We’re driven more quickly by moods than by fully considered ideas.

It seems like ideas come after the political mood. They follow it and try to construct the underpinning. For much of the 20th century, it seems to have been the opposite: ideas led, and the emotion of the masses responded.

Exactly.

The conservative movement was a set of ideas crafted and refined during the 1950s, 1960s, and 1970s. Those ideas found their emotional standard-bearer, translator, and salesperson in Ronald Reagan, who had followed the ideas as they developed and honed his ability to express and apply them politically.

That’s very different from Donald Trump as the political definer of the current era. There’s a set of ideas, but the defining elements were more attitudes, impulses, and vibes. The ideas came afterward and tried to figure out how to attach themselves.

A lot of this may have to do with the immediacy of the media environment and the power of media messages to spread so quickly.

What do you think Milton Friedman would say about Donald Trump, about his winning in 2024, and about this political moment in general?

I think he would love DOGE. That goes without saying. I think he would focus on that because he would really love it.

He would be very alarmed by tariffs and the return to protectionism. He believed that part of what made the world peaceful in the second half of the 20th century, compared with World War II, was that the world had become more connected through trade.

The great hope was that if people traded with each other, they wouldn’t fight. He was also a proponent of the free movement of capital. He would oppose the idea that Nippon Steel couldn’t invest in the United States.

He would struggle with Trump. He wholeheartedly embraced Reagan and worked to minimize the parts of Reagan’s legacy he disliked. I think it would be harder for him to embrace Trump because Trump had a different style.

He might eventually have come around. He would say that this was a chance to reduce the size of government.

At the same time, the Trump administration’s spending plans aren’t fiscally conservative. Friedman’s concern wasn’t so much debt as the lack of any mechanism to stop government from growing. Government simply grows and grows.

He came to believe that deficits weren’t necessarily bad because they could make politicians cautious about spending.

I think he would be concerned about threats to the U.S. dollar’s position as the world’s reserve currency because of increased debt and spending. He was concerned about low interest rates.

He died in 2006, before the zero lower bound, but he had seen low interest rates. He said that people talked about low interest rates as if they were automatically good, but there should be a price on capital. The price shouldn’t be too low.

He still had macroeconomic insights that would be important today.

You wrote a Wall Street Journal essay titled “How Inflation Ended Neoliberalism and Reelected Trump.” Can we weave that into this discussion about inflation and Trump? What was the main idea?

The main idea was to look back and say that we had been living in a world focused on monetary policy, steady monetary policy, free trade, and reduced regulation. This was called the neoliberal era.

My argument was that much of this era was driven by inflation. Friedman predicted inflation in 1967. It broke out in Britain and the United States during the 1970s.

Every institution had been designed around stable prices. Once inflation broke out, prices were no longer stable.

Tax rates, for example, weren’t adjusted for inflation. If your income went up because of inflation, you could move from a low tax rate to a high tax rate without actually having more purchasing power. On paper you had more money, but everything cost more.

That helped produce the taxpayer revolt. American corporations shifted toward financial investments because the tax breaks they received for depreciation and building new factories weren’t adjusted for inflation. Those investments no longer paid off in an inflationary environment.

When Paul Volcker came in during the early 1980s and fought inflation by raising interest rates, he completely reordered the banking sector. Banks had legal limits on the interest rates they could charge, and once market interest rates exceeded those limits, new financial forms emerged to take advantage of the situation.

My point was that the era we lived through was ushered in by inflation. Then people turned against its basic formulations and said that they had hollowed out the industrial base, encouraged too much immigration and openness, and required reshoring and more spending.

We had disinvested. The net result was that people forgot about inflation. They forgot that it could exist.

There were theories on the left, such as modern monetary theory, which argued that we didn’t need to worry about inflation and could spend what we wanted. Then inflation came back.

My argument is that this opened the door to Donald Trump’s presidency. It could be a deeply transformative moment that changes the size and shape of government, foreign policy, immigration policy, and the demographics of the country.

All of that was made possible by inflation. The great mistake of the previous era was forgetting how fundamental inflation had been to the rise of the political order and underestimating how much inflation would change the current order.

That’s why I think people should study history. If you had studied history, you would be aware of this. People forget, just as banks forgot that interest rates could go up. They became so accustomed to low rates that a decade seemed like forever.

History teaches you to have a much broader scope and to account for the possibility of things happening that are different from what’s happening today.

I hope we don’t forget inflation entirely. But there’s a strong chance that Trump’s policies will initiate even worse inflation and prove to be his undoing.

The ironies of inflation could continue.

If Milton Friedman were still alive and working with Elon Musk on DOGE, what advice would he give? What would he focus on in terms of where to cut, how to cut, and how to think about cutting?

His signature policy move was taking the price mechanism and trying to make it the basis of policy. That seems obvious today, but it wasn’t in the era when he came of age.

He would say to remove rent controls and let housing prices establish themselves through the market.

He was very opposed to national parks. I actually think national parks are good, so I hope the DOGE people don’t adopt this idea, but Friedman would say that instead of funding national parks through an allocation, they should be funded by the revenue they bring in when people visit them.

He was always looking for ways to let prices make decisions.

He would also focus on occupational licensing and barriers to entry. He thought one of the worst things government did—and sometimes private entities did this—was create barriers to entry to protect industries and markets.

He discussed this in the case of the medical profession, although I don’t think that’s a good example because we have a collective interest in doctors being highly trained.

You could look at nail technicians or hairdressers. There are often licensing requirements. Or take the case of childcare centers. Washington, D.C., passed a law requiring people who run childcare centers to have college degrees.

What does that do? It excludes a whole group of potential entrepreneurs who don’t have college degrees but might be very good at that business.

Friedman would say to look for cases where private interests have used the state to protect themselves. Clear away those barriers and let competition and prices guide outcomes.

Open up more competition and allow the market to provide more signals to drive decisions. That would naturally lead to cutting a lot of government bureaucracy.

I think so. Friedman would also return to the design of the minimum income or negative income tax. He eventually decided to run it through the tax system because the government was already collecting the data and could send the money out through the existing system.

That was better than having a social bureaucracy where people had to come in, fill out forms, and document whether they owned a car, what their income was, and who lived in the household.

He argued that the people who primarily benefited from that system were the bureaucrats processing the paperwork and implementing the rules.

If you removed that, you could get help to people much faster without the drag of people doing unproductive administrative work.

He would try to cut administrative overhead. We now have technology that can send benefits through smartphones, move much faster, and handle information on a mass scale.

It’s painful, but one of the major things you can do is digitize everything. Convert everything so that the speed of the signal is instantaneous. There’s no paperwork; it happens immediately.

Then the pricing signals and all these other things become immediately available to people. That seems like the low-hanging fruit in government.

Government IT systems could be vastly improved. But that would also mean that many people would be fired, and a lot of people would be hurt by DOGE.

That’s a difficult question. A lot of people could be fired to make room for a new system that might work better. There will be a lot of pain, and I don’t know what the solution is.

That may also be why Friedman favored a minimum income. He talked about it as countercyclical. When things were very bad, spending on it would naturally rise. Economists today call that an automatic stabilizer. When it wasn’t needed, its cost would fall.

Maybe there’s a way to sweeten the process with buyouts. That would certainly be better.

I did a podcast with Javier Milei. He has consistently praised Milton Friedman and cited him as one of his inspirations.

What do you think Friedman would say about what’s happening in Argentina and what Milei is trying to do?

I think he would appreciate it. Milei is much more of an Austrian-inspired thinker, but he definitely appreciates Friedman.

On the macroeconomic level, Friedman understood that treating inflation is painful, but the longer you put it off, the harder it becomes. He would be telling Milei, as Milei is doing, to communicate that there is short-term pain for long-term gain.

I think he would be supportive. He would also be thrilled that Milei is good at explaining abstract ideas and putting his policies within a larger framework. That was very meaningful to Friedman.

I don’t know how politically persuasive it is overall. Milei is very intense. He doesn’t have the same gifts for salesmanship and setting people at ease that someone like Ronald Reagan had.

But it seems that this is what Argentina was calling for at the moment.

He’s more chainsaw than warm blanket.

Milei likes to quote a line attributed to Milton Friedman: “If you strive for equality over freedom, you often get neither. But if you strive for freedom, you often get both.” Do you think there’s truth to this?

On the big picture, definitely. We’ve seen that focusing too much on equality can cause people to downgrade many other important things.

But it depends on how you define freedom. The statement is too broad. If freedom means not having to pay taxes when you’re successful, that can have all kinds of consequences.

How will education be provided? How will it be paid for? If you generate too much inequality, or people feel you’ve generated too much inequality, they may value that more than they value freedom.

There needs to be a balance. It’s difficult to make global statements. You have to break them down and ask what you mean.

Milei is coming from a very different context and country, one that has experienced enormous upheaval, government intervention, inflation, and political turmoil. He may be thinking about the statement differently from the way Friedman did.

There’s been a real threat of hyperinflation, along with a high level of corruption or the capacity for corruption. It’s a messy situation.

Milei likes to quote the same line from Friedman: “If you strive for equality over freedom, you often get neither. But if you strive for freedom, you often get both.” Do you think there’s truth to this?

In the macro sense, for sure. Equality is a seductive ideal, and people believe in it so deeply that they can carry out horrible crimes in its name.

But the words are too large and difficult to define. What kind of freedom are we talking about?

If we’re talking about the freedom of ordinary people to be entrepreneurial, make their own way, start new things, continue what they’re doing, and keep what they’ve earned, then yes, that can increase equality overall.

If freedom is simply a code word for lower taxes, then there has to be a way to support education and the institutions that structure society and make competition possible.

People prosper when they’re well educated. Education is generally state-funded, so there needs to be a way to support it.

It’s a broad statement, but Milei comes from a very different context—South America, with enormous upheaval and economic devastation in pursuit of equality. I understand why he wants to rebalance things with an emphasis on freedom.

We’ve talked about Reagan. What are some interesting stories about how Milton Friedman navigated the Reagan and Nixon administrations and gained influence?

The Nixon administration is interesting because inflation began to undermine the Bretton Woods currency system established after World War II.

Bretton Woods placed the U.S. dollar at the center of the global economic system. The industrialized Western countries agreed to trade their currencies at fixed ratios set by governments. A franc was worth a certain number of dollars, and a German mark was worth a certain number of francs.

Countries could also come to the United States and exchange the dollars they held for gold because the United States was on a modified gold standard. There was a ratio of gold to paper money.

The dollar quickly became central to the system. Converting into and out of dollars was the mechanism of trade for many countries.

Friedman said that what we should have instead were floating exchange rates. This was another idea in which policy would be set by prices rather than through top-down administration.

Currencies should trade on an open market and fluctuate. That was a completely outlandish idea at the time, but he was identifying instability in Bretton Woods.

As more dollars were printed, they were worth less. If European countries continued trading their currencies for dollars, they would import inflation into their economies.

They began saying they didn’t want the dollars and wanted gold instead. They had the right to go to the Treasury, submit an order, and receive gold.

They did this more and more. It became known as the gold drain, and the United States began running out of gold.

Officials knew this was happening throughout the 1960s. They tried various ways to fix it. When Nixon came into office in 1968, Friedman sent him a memo saying it would become a serious problem.

He used a graphic metaphor, saying that it was a running sore and had to be lanced immediately, or it would explode.

Nixon filed the memo away. He liked people to think he was influenced by and followed the wisdom of Milton Friedman, but he didn’t actually want to do that. He wanted the political benefit that came from being associated with him.

Then the Treasury Department realized that the United States was going to run out of gold. Officials decamped to Camp David, and Nixon decided to stop redeeming dollars for gold. This became known as closing the gold window.

At the same meeting, he also instituted price controls. He did many things at once because he saw the situation as an emergency. He called it the New Economic Policy, which was an unconscious echo of the Soviet New Economic Policy and a problematic name for a problematic policy.

Friedman was furious about the price controls, but he was pleased that Nixon had closed the gold window. He wanted the United States to go all the way to floating exchange rates.

The idea was heretical within the Treasury Department. Everyone was committed to gold-standard convertibility.

At this point, Friedman had a close relationship with George Shultz, a high-level appointee who would eventually become Treasury secretary. Friedman fed Shultz his ideas about floating exchange rates and not trying to reconstruct Bretton Woods.

Paul Volcker, who was in the Treasury Department at the time, sensed that Friedman was somewhere behind Shultz, feeding him ideas.

Shultz gradually allowed Bretton Woods to fade away. He didn’t make grand pronouncements; the world simply shifted toward floating exchange rates.

That was a real measure of Friedman’s influence. If another economist had been whispering in Shultz’s ear that catastrophe was imminent and Bretton Woods had to be restored, the U.S. government might have worked harder to restore it.

The shift became one of the foundations of globalization. People don’t realize that, in addition to fixed exchange rates, there used to be restrictions on bringing capital into and out of countries. You had to register investments, and there were many rules and strictures.

The collapse of Bretton Woods opened all of that up. It was a precursor to globalization.

Friedman was also ambivalent about Nixon. He saw that Nixon wasn’t honest, though he thought he was intelligent. Nixon’s dream was to create a new centrist majority, so he did many things that contradicted his supposed economic principles.

Friedman disliked that. He also disliked the price controls.

He communicated with his old mentor Arthur Burns, who was now chair of the Federal Reserve. Burns was essentially doing everything wrong in monetary policy.

I describe their anguished letters back and forth in the book. Burns didn’t have a solid theory of inflation, and the more Friedman pushed him, the more Burns seemed to willfully ignore him and do the opposite.

Burns ran a very loose monetary policy. Inflation was considerable throughout the 1970s—above 10% at times and hovering around 8% for much of the decade.

The Carter presidency largely failed. Foreign policy was part of the reason, but the failure to tame inflation was another.

Then Reagan came in. Reagan loved Friedman, and Friedman loved Reagan. It was mutual.

The Reagan administration created an economic advisory board, and Friedman was on it. He was retired and entering his golden years, but he had Reagan’s ear.

He convinced Reagan of his theory of inflation: inflation was a monetary phenomenon caused by bad monetary policy. It had an accelerating dynamic, and the only way to end it was to signal clearly that government policy had changed.

It would be painful for a short time. People would suffer, but they would emerge into stable prices and economic prosperity.

Paul Volcker implemented the policy. He had been influenced by Friedman and bought into the big picture. He even adopted Friedman’s specific technique of focusing on monetary aggregates and monetary growth rules.

Volcker soon discovered that because of inflation and financial deregulation, the aggregates didn’t work the way Friedman had predicted. The specific policy didn’t work especially well.

What did work was allowing interest rates to rise above inflation until the public and financial markets believed that the government was serious about fighting inflation.

After a decade of presidents saying they were going to whip inflation, monetary policy had lost credibility. That’s why people focus so much on credibility today: once it’s lost, it’s very difficult to regain.

Volcker regained it with interest rates above 20% and very high unemployment, including unemployment as high as 25% in the construction sector.

Milton Friedman whispered in Reagan’s ear that this was the right policy and that he should stay the course. Friedman hated Volcker, and Volcker hated Friedman. Friedman never gave Volcker credit for the policy, but he gave Reagan credit.

He did deserve some credit for keeping Reagan from wavering and helping push the policy through. He also told Reagan pragmatically that he had to do it early in his 4-year term. If he acted during the first 2 years, the economy would turn around by 1984, when he ran for reelection.

That’s exactly what happened.

Could we take a small tangent about Bretton Woods, the gold standard, and this entire space of ideas? Many people today care about cryptocurrency.

What would Milton Friedman say about cryptocurrency and the role it might play in the economy? Would he support or oppose it? Could we consider the present and also the next 10 or 100 years?

There’s a clip from around 1992 in which people say Friedman predicted cryptocurrency because he talked about payments eventually becoming electronic.

In some ways, he did see that computers and money would come together. He would probably see a use case for cryptocurrency, but he wouldn’t buy the stronger forms of crypto ideology.

He wouldn’t believe that we were heading toward a future with many competing currencies, or that we would have a distributed or stateless currency.

Hayek addressed this clearly in his paper “The Denationalization of Money.” In the late 1970s, Hayek argued for competing currencies. Friedman responded to that, as well as to people writing about free banking.

He said that even if you developed multiple competing currencies, society would eventually converge on one because people want a single currency they understand. They don’t want a large number of options.

Even in places where people have had the option of using different currencies, they’ve used the options minimally.

He also said that the state always steps in. Theoretically, it doesn’t have to. He could draw a model showing how it might work without the state.

But in actual reality, human societies throughout time and space have involved the state in providing money because money has so many effects on so many people.

He would probably find uses for cryptocurrency and think it was interesting, but he wouldn’t see it as something that would displace state money and produce a range of distributed currencies.

He also emphasized that changes in monetary systems happen amid great crises. In countries where the state isn’t controlling money well, people may turn to cryptocurrency.

But because money is so fundamental, there will be enormous political pressure on a country that gets its currency profoundly wrong. The government will fall and another one will replace it.

Episodes of hyperinflation don’t last very long because they’re so upsetting to people.

We’ve talked about it many times, but the Great Depression and the University of Chicago are still fascinating. There were people like Jacob Viner, Frank Knight, and Henry Simons who influenced Friedman’s thinking.

Could you talk about the Room 7 situation at the University of Chicago? Philosophically, what does it take to explore ideas together—to deliberate and argue in that space? How does somebody like Friedman form the seed that eventually blooms?

He got to the University of Chicago and made fast friends. In his third and fourth years, they became what I call the Room 7 gang.

Room 7 was an old storeroom in the basement that they took over. That’s where they held their jam sessions.

What brought this group together was Frank Knight. He was a charismatic leader with a group of acolytes clustered around him. That was a key ingredient.

They also had the feeling that they were onto something the rest of the economics field had forgotten or rejected. There was a sense of mission.

There was a formal education, and then a parallel education rooted in admiration for a thinker. They shared that admiration, which produced a shared sense of mission.

Friedman educated himself. In lists from non-economics courses, he wrote down books he wanted to read and noted their prices. He had John Stuart Mill’s On Liberty with “50 cents” written in the margin.

He created a parallel curriculum alongside his formal economics education. He read the traditions of political liberalism, discussed them with friends, and developed a shared intellectual mission.

The remarkable thing is that the members of this group scattered for about 10 years and then came back together. George Stigler, his great friend, was eventually hired at Chicago. Aaron Director, who was Friedman’s brother-in-law, was there. Many of these people remained connected, and Friedman eventually became Frank Knight’s colleague.

That was the base that shaped him: a profound peer group.

The other important piece is that Friedman was a collaborator and an open-minded collaborator. He had extraordinary connections with women economists.

He found, first in Anna Schwartz and later in a group of women who were friends with his wife, an untapped pool of talent. He immersed himself in a world of consumption economics.

That resulted in his technical work on the consumption function and the permanent income hypothesis.

For Friedman, intellectual production always happened in a social context that blended friendship with intellectual partnership. He had only a handful of friends who weren’t also economists interested in the same questions.

He lived and breathed ideas all day long.

Can you speak to the jam sessions? What do we know about them? Were they analyzing and discussing papers, or was it more like arguing over beers?

It was more like arguing over beers. Several people said that it was all about Frank Knight: what he said, what he meant, and whether he was right.

Knight would say one thing and then another. If you read him, he’s hard to follow because he’s full of qualifications and ironies.

He would throw out these fragments, and the students would grab onto them. They would come back together and try to assemble a worldview.

Knight fell into a terrible depression. To cheer him up, they planned a party and went back through his previous writings. They assembled them into a book that was published as *The Ethics of Competition and Other Essays*.

You can read the introduction, which was written in part by Milton Friedman. They weren’t simply discussing Knight; they were poring over his work.

One of them described it as a general-equilibrium system. You had to understand all the parts, and then suddenly everything fit together as a whole.

They were getting inside the mind of a great thinker and understanding how it all fit together. Then they tested their ideas against Knight’s.

One of Friedman’s first papers in statistics was a rebuttal of Knight. He responded to Knight’s ideas about risk and uncertainty.

Knight made what we might call a black-swan argument. He said risk can be calculated, while uncertainty cannot. Philosophically, you can’t get your hands around uncertainty; it’s the black swan.

Friedman published a statistical paper saying that he could put uncertainty on a graph.

There was a kind of filial killing of the father when he returned and rejected Knight’s approach and pessimism, even though Knight remained a foundation of his thinking.

Is there something you could say about Friedman’s thinking process? You mentioned the strong collaborative component, but there’s also a story about the number system his family used.

Could you explain that as a tangent of a tangent? I think “1” meant that the other person was right, and “2” meant that you were right and the other person was wrong.

The number system evolved as a quick and efficient way to communicate, but they were also very clear about it.

Using a number reminded the listener that it was hard to say the words, “I was wrong.” It called on the other person’s sympathy and acknowledged that you were doing something difficult.

It also reminded them that you were part of the same family with a shared code. You were signaling closeness and love.

It was a way to disagree without breaking the relationship.

Admitting you’re wrong comes with a warm, fuzzy feeling.

That’s powerful. A lot of the friction in human interaction comes down to not being able to admit that you’re wrong efficiently, quickly, and regularly.

Being able to do that is really powerful.

How did Friedman engage in collaboration and develop his ideas? Was there a thinking process?

He taught at the University of Chicago and tended to teach for 6 months and then have 6 months off. He spent the summers in New Hampshire, where he had houses near the border.

That was his deep-thinking time. At Chicago, he was teaching and arguing. Some students loved his style: he was very much in charge and kept them on their toes. Others found it overwhelming and couldn’t cope with it.

When he was teaching, it was go time. He spent a lot of social time interacting with other professors, going out, presenting papers, and arguing with people at Yale and Harvard.

Then he would go into deep dives during the summer. He regularly traveled to New York to see Anna Schwartz. They had extensive correspondence, because phone calls were expensive, but they also had meetings.

He would go to New York at the beginning of the summer, see Schwartz, and then see her again on the way back to Chicago. They had these deep check-ins.

People would also visit him in New Hampshire. He had a separate studio where he worked. At night, friends would come over.

His friends were all economists. There was a cluster of economists living within driving distance of Dartmouth’s library so they could access books. They would come over and argue and talk into the night.

He needed that deep focus, but he also lived a very engaged and socially embedded life. His marriage was part of that.

Is there something you could say about love, marriage, and relationships that made it all work? It was a vibrant partnership, and they wrote a biography together.

They were very complementary—almost like yin and yang. She was introverted and somewhat suspicious and skeptical of others. He was extremely extroverted, optimistic, and high-energy.

They also lived at a time when it was clear to society what the roles of a man and a woman were, and they largely adopted those roles.

Rose Friedman did important economic work. She was involved in the early stages of the theory of the consumption function, but she didn’t complete her degree because she understood that, if she wanted to be married and have children, there wasn’t a real path to becoming an economist in the world she lived in.

I think a lot of it was not necessarily gendered. Her brother, Aaron Director, was also very private, shy, and introverted. He exerted quiet intellectual influence over his friends.

That may have been a family trait—a preference for being behind the scenes. It wouldn’t have worked any other way because Friedman was so extroverted.

Rose once said, “When I married Milton, I lost half of my conversations. When David came along, I lost the other half.”

The household was dominated by male voices, and she didn’t have much room.

What was difficult for me in my research was that she didn’t leave much of a trace. She put together Milton Friedman’s archive and took herself out of it. I had trouble finding her actual voice in the historical documents.

She didn’t want to leave that behind, but she was an essential part of his success. She pushed him to write the *Newsweek* column and to do *Free to Choose*.

She essentially wrote *Capitalism and Freedom* by taking all his random notes and putting them together into a book. That became a testimony of his ideas.

She shared many of his ideas. If you take Anna Schwartz, Rose Friedman, and the other women who collaborated with him out of the story, you have a much thinner résumé than the one he actually had.

It’s sad, and it makes me wonder about the private conversations between partners. They may not show up in the record, but they probably influence a person more than almost anything else.

Those quiet conversations can be incredibly important.

Let’s switch to another great mind of the 20th century: Ayn Rand. We’ve talked about the similarities between her and Friedman as fighters for freedom and capitalism.

What is Rand’s philosophy? Could you give a big, 10,000-foot summary of Objectivism?

She called it Objectivism. She used to summarize it by saying that she could explain it while standing on one foot: epistemology, reason, ethics, selfishness, politics, capitalism.

She did several things with Objectivism.

First, she said the defining feature of humanity is rationality—the rational faculty. Because rationality defines humanity, there is an objective reality that we can access and know through reason.

That’s the objective epistemology. The social and economic system that allows rationality to flourish and is based on rationality is capitalism.

Rationality only works, in her view, as an individual capacity. Rationality teaches that you should pursue your own interests, and she called that selfishness.

Selfishness is tricky because it has strong negative connotations. She meant something closer to self-actualization. She tried to express that being selfish didn’t mean trampling on others; it meant being motivated by internal measures and standards.

In her fiction, she shows the false selfishness of Peter Keating, an architect who steps over everyone to advance his career. She says that isn’t true selfishness because true selfishness would recognize that it’s wrong to take someone else’s work and pass it off as your own.

The other major piece of Objectivism is an approach inspired by Friedrich Nietzsche’s ideas about revaluing values and the genealogy of morals.

Rand said Western culture had converged on the idea that altruism and selflessness were good. That had led to communism and to devaluing the individual in favor of the collective.

She said we needed a new moral code that elevated selfishness and the individual, taking the things we had been told were bad and saying they were actually virtues.

That’s what she was trying to do with Objectivism. It was as ambitious an intellectual project as there could be, and that ambition is what drew people in.

At the same time, she was flying in the face of the way human morals, ethics, and societies had evolved. She couldn’t single-handedly recreate them the way she wanted.

She wasn’t doing herself any favors by taking these words and trying to rebrand them completely. Couldn’t she have called it self-actualization instead of *The Virtue of Selfishness*?

There’s a negative connotation to selfishness and a positive connotation to altruism.

She had a student and later close associate named Nathaniel Branden, who became her revered adviser. He asked her not to use the word selfishness and to come up with another word.

Part of her liked the provocation. She wanted to unsettle people and didn’t want to give that up.

It seems that she chose the hardest possible form of the argument. Listening to her is inspiring because you can see the individualism radiating from her.

She was an incredibly unusual human being. That was her strength, but it was also her downfall.

She looked to herself as a model for understanding humanity and never fully processed how different she was from other people.

Given everything we’ve discussed, what are the interesting differences between Ayn Rand and Milton Friedman?

Broadly, we can put them in the same category, but Rand had a focus on ethics and rationality, as well as a desire to be revolutionary, that was much stronger than Friedman’s.

Friedman wanted to overthrow the economic consensus. He didn’t want to overturn the moral basis of Western society.

In one of Frank Knight’s essays, “The Ethics of Competition,” he says you can’t build an ethic out of competition because that would be monstrous. It would mean that the winner of the competition was ethically right, opening the door to might makes right.

That’s what Friedman struggled with. He couldn’t treat capitalist outcomes as ethical in themselves. He couldn’t do it. It didn’t feel right.

Knight says that no one would ever do this. I remember thinking, “Frank Knight, you haven’t read Ayn Rand yet.”

That’s exactly what she does. She takes the outcomes of capitalism and market competition and says they have ethical meaning. It’s ethical to try to succeed, and to succeed in a capitalist society.

She can create a fictional world in which people succeed through ethical behavior. She doesn’t have to wrestle with a capitalist world in which people succeed through fraud, corruption, or other means.

She creates the best possible version of success under capitalism and holds it up as an ideal.

What’s important is that very few people had done that. She came at a time when everyone was emphasizing capitalism’s downsides, and she said there was another way to look at it.

She showed the positive sides of capitalism in the mythic register. She constructed capitalist characters as heroic figures and romanticized them.

You mentioned We the Living as one of your favorite books of hers. But can we stay in the mythic register with The Fountainhead and Atlas Shrugged?

What are some memorable and inspiring moments or insightful ideas from those books?

The Fountainhead is the story of a struggling architect named Howard Roark. It follows his life and career.

The message is a version of “To thine own self be true.” Roark’s designs are avant-garde, nobody appreciates them, and he continues to do what he wants. He focuses on his own vision and genius.

That has inspired creators of all kinds. It’s barely realistic as a portrait of human achievement, but it’s aspirational.

There’s a character who is in an adversarial relationship with Roark and asks him, “What do you think of me?” Roark says, “I don’t think of you.”

That’s the ideal. You’re not thinking about other people. You’re an island unto yourself, focused on your own goals and capacities.

You’re not doing it to impress other people, to be better than other people, or to dominate other people. You’re expressing your inner soul.

That has captivated many people. The Fountainhead is one of those books that causes people to change their lives or feel called to their higher selves.

There’s also the scene with the dean of the architecture school. The dean expels Roark and brings him into a meeting, thinking that Roark will plead for a second chance.

The dean says:

“Your work is contrary to every principle we have tried to teach you, contrary to all established precedents and traditions of art. Do you mean to tell me that you’re thinking seriously of building that way when and if you are an architect?”

Roark replies, “Yes.”

The dean asks, “My dear fellow, who will let you?”

Roark says, “That’s not the point. The point is, who will stop me?”

Rand was coming from communist Russia, but there’s also a “Don’t mess with Texas” quality to it.

It resonates with anyone who feels they’re fighting the powers that be.

I thought you might mention the quote in which Roark says something like, “I inherit no tradition. I stand at the beginning of one.”

I think Rand was thinking about herself when she wrote that. She felt that she inherited nothing and stood at the beginning of a new tradition.

The Fountainhead came out in the middle of World War II. Rand was an unknown writer, and it was a strange book. It was rejected by 12 publishers before one took a chance on it.

The editor who read it thought it was great, but his boss said no. The editor said that if they didn’t take the book, he would quit.

The book was published and became a bestseller by word of mouth. It wasn’t heavily advertised and received only one good review, but people told each other how much they liked it.

It kept going through printings and selling out. It was made into a movie.

It arrived at a time when Americans were engaged in a great collective endeavor—World War II. They were making sacrifices for the collective.

Paradoxically, while people were doing that, they were drawn to a vision of someone who didn’t have to compromise at all and could live exactly as they wanted.

They might have been sleeping on an ocean liner after being drafted into the war, but they were reading The Fountainhead and feeling better about themselves.

The Fountainhead is also hugely popular in India, which is fascinating. People there describe it as a breath of fresh air in a traditional and conformist culture. It gives them a feeling of freedom and possibility.

Atlas Shrugged has some of that too, but it’s more philosophical. The details and nuances of objectivism seep into Atlas Shrugged.

The Fountainhead is more like a book that makes you change the path of your life.

That’s beautiful to see. Books can have that power.

Rand knew what she was doing. People say she was a bad writer or that her characters were heavy-handed, but she had started as a screenwriter and had analyzed films for movie studios.

She knew how to manipulate plot, character, and drama. She also knew she was writing for adolescents. Teenagers love Rand, and that’s who she was writing for.

She said she was writing for people as they started out in life and were thinking about who they wanted to be. She wasn’t writing for the weary middle-aged person; she was writing for young people looking for inspiration.

People say similar things about The Alchemist. Many intelligent adults say The Alchemist changed their lives, and the same is true of The Fountainhead.

I sometimes get criticized for using words that are too simple. But simple words can have power. A cliché sometimes needs to be said, and it may need to be said in an over-the-top way, in the mythic register, because that’s what resonates with us.

We’re heroes in our own stories, and sometimes we need to hear that message to take a bold step, take a risk, or take a leap.

Rand knew she was doing propaganda in a way. She thought she was creating pro-capitalist propaganda.

She had a degree from the University of Leningrad and had been raised in Soviet Russia. She said that the other side had presented its case in a certain way, and that she needed to present the opposing case with the same force.

Why is she so divisive? People seem either to love her or hate her.

It’s partly because of the purity of her claim that you get what you deserve. There’s a lack of charity in it.

She creates a fictional world where everything is arranged perfectly. There’s no contingency, accident, or bad luck, and there aren’t really many children or people with disabilities. It’s an idealized world.

People become infuriated because it seems inaccurate. They ask how she can derive a social theory and philosophy from such a world, and how she can miss what many people see as the ethical, altruistic, or charitable instinct.

They become enraged because she goes so far. They’re outraged that she does the thing Frank Knight said nobody would do.

It’s unsettling.

Would you say her main blind spot is that objectivism paints the world in black and white? What are the flaws of objectivism?

The major flaw is that it’s justified through a fictional world rather than through reference to the real world. It isn’t empirical.

Rand herself would say that she wasn’t writing about things as they were, but about how they should be. That idealism undermines objectivism as a mechanism for understanding the world as it actually is.

That’s a major contrast with Milton Friedman, who focused on how things were rather than how they should be.

Another problem is elevating rationality above every other mode of insight or thought.

What happens in Rand’s life is that she creates a cult of reason around herself. It’s called the Collective, and it’s a group of young people in New York City who are drawn to her work.

She’s already famous and is writing Atlas Shrugged, sharing drafts as she goes. One member of the Collective is Alan Greenspan, who later became chair of the Federal Reserve.

Greenspan was incredibly taken with her. He said he had been a narrow technical thinker who never thought about ethics, politics, or anything larger until he met Rand.

He was part of this group, but over time the members came to believe that they were all individualists, dedicated to individualism and capitalism and different from everyone else.

They also became deeply conformist. They came to share Rand’s views on everything, from music and art to clothing. She got a dining-room table, and several members of the Collective bought the same table.

They believed they were acting rationally, and that acting rationally meant agreeing with Ayn Rand. They believed there was no way to make decisions other than rationally, so disagreeing with Rand was irrational.

They became caught up in a damaging, cult-like circle around her.

For a cult of reason, they became awfully emotional whenever someone disagreed with Ayn Rand.

It’s both hilarious and absurd.

Murray Rothbard, a famous anarchist, fell into the Rand cult. When he disagreed with her, there was a kind of show trial in which he was told that he was wrong about everything.

He then created a small pseudo-cult of his own. Two members of that group switched over to Ayn Rand, and one of them tore a dollar bill in half and mailed one half to Rothbard to symbolize the end of their relationship.

It was high theatrics.

Staying with the drama and theatrics, who was Nathaniel Branden? Could you take me through his relationship with Ayn Rand and their dramatic falling-out in 1968?

After The Fountainhead, the book was sold to be made into a film, and Rand moved to Hollywood to help write it. She wanted creative control and was also working in screenwriting.

A Canadian student had written to her several times. He wrote again, saying he was at UCLA. She replied, “Young man, you’re so full of errors. Why don’t you come visit me and I’ll straighten you out?”

He visited, and they had a meeting of the minds. They talked all night. He came again with his girlfriend, and Rand liked him.

They began an intense relationship in which they spent every weekend at her house, staying up all night discussing ideas. He became completely converted to Objectivism.

Rand began counseling him and his girlfriend about their relationship. It was an intense connection.

They graduated from college and enrolled in a graduate program at Columbia. After they left, Rand became depressed. Within a few months she packed up her home and moved to New York, saying that she liked New York better.

That became the seedbed of the Collective.

Nathan and his girlfriend married and changed their name to Branden. They never publicly explained it, but many people pointed out that the name contained “Rand” as an acknowledgment of how important she was to them.

Over time, romantic feelings developed between Ayn Rand and Nathaniel Branden, who was about 20 years younger than she was.

They discussed the feelings and rationally concluded that they should become lovers. They were both married, so they called a meeting and informed their spouses of the decision.

They said it would initially be only an intellectual relationship, but they wanted a few hours alone together each week. They didn’t want to deceive anyone, so they wanted the spouses to know and approve.

One thing led to another, and it became a full romantic and sexual relationship. It was open among those 4 people, but not more broadly.

At meetings of the Collective, Alan Greenspan and others would come together to drink coffee and talk all night. They knew Branden was the leading Objectivist, but they didn’t know that he and Rand were having a romantic and sexual relationship.

When Atlas Shrugged came out, reviewers panned it. People hated the book.

Rand wasn’t Howard Roark. She fell into a deep depression because her masterpiece had been rejected.

The romantic relationship ended, but the close personal relationship continued.

Branden was still married to his wife and eventually began an affair with another young woman. By then he had started the Nathaniel Branden Institute to teach Objectivism.

He was making good money and becoming famous. Rand had supported the institute. At first, Branden had created it to help her through her depression. He told her that the world needed to recognize her genius, and that although people had missed Atlas Shrugged, he would teach them.

The institute became very successful. It had its own newsletter and social network. The small cult around Rand expanded into a larger social world.

This was connected to the burgeoning conservative movement. Objectivists criticized the draft, and there was a libertarian and Objectivist world developing.

Branden had found a new partner but didn’t tell Rand because he knew she would be upset. It continued for years. Rand sensed that something was happening but couldn’t figure it out.

Finally, Barbara Branden told Nathaniel that he had to tell Rand because it had gone on too long.

Rand found out, and the entire structure collapsed. She expelled him and broke off contact.

Nobody has ever fully explained what happened. It’s called the Objectivist Schism. Objectivism divided because some people said, “How could Rand have done anything wrong?” Others said, “What is this letter about? What did Branden do? I need more information and can’t simply take her word for it.”

Some people said they were having an affair, while others said that couldn’t possibly have happened.

I argue in my book that this ultimately benefited Rand’s ideas. She had been so controlling of Objectivism, but after she withdrew from the public role, Objectivism flowed into the student libertarian movement.

Some Objectivists became conservatives. The ideas spread more generally. People no longer had to drink the Kool-Aid or take an official course.

Branden went on to become part of the self-esteem movement and the human-potential movement in California. Rand lived another 10 years or so, but she didn’t produce major work afterward.

Since we’ve been talking about the rationalization of some strange sexual partnerships, I have to ask about the alleged rape scene in The Fountainhead.

Was she trying to be controversial? How should we read it? Is it a glimpse into Rand’s sexuality? More broadly, what was her view on sex, sexuality, and power dynamics in relationships?

There’s an Objectivist theory of sexuality, probably the least convincing part of Objectivism.

It goes something like this: your sexual desires express your highest values and are related to your rationality, which is also related to your highest values.

For Rand, this explained her attraction to Nathaniel Branden, and Branden’s attraction to her. Branden absorbed this so deeply that when he was later sexually attracted to a woman who wasn’t particularly accomplished but was beautiful, it caused him deep anguish and guilt.

That’s the Objectivist theory.

The gender politics are strange. We have to back up and ask who Ayn Rand was.

She was born Alisa Rosenbaum in Russia. She stood out from the crowd from the beginning and never really fit in.

She wasn’t conventionally beautiful. She struggled with her weight and didn’t think she had a beautiful face. She was independent and didn’t meet the traditional metrics of femininity.

She found love with a man who was very handsome but very passive, yet she wrote fiction about strong, manly heroes.

That seems like a projection. The man she was actually with wasn’t a strong, manly hero. The heroes she wrote about were probably people she wouldn’t have been able to sit in the same room with for more than a minute before getting into a raging argument.

She then developed a theory that a woman should worship her man, and that a woman finds her true expression by worshiping the man she’s with.

That wasn’t how she lived her life. It was a compensatory theory for her inability to conform to the gender norms of her day.

She articulated those norms in an exaggerated way to compensate for the fact that she didn’t meet and couldn’t enact them.

The rape scene embodies the idea that a woman should worship a man. But I tend to read it in terms of literary genre.

Rand was a screenwriter and a consumer of movies. The rape scene is paradigmatic of the romance genre. In pulpy romance novels, the hero rapes the heroine and then they fall in love. That’s the trope.

It’s shocking when you read it now, but if you were reading many novels in that genre, you would find that it was standard.

It was also part of the book’s appeal. Rand knew that if she included taboo-breaking sex, people would tell their friends about it.

There was a feminist critic of Rand named Susan Brownmiller who hated the scene and wanted to write an angry denunciation of it. She went to the library to get The Fountainhead and wondered how she would find the scene in an 800-page book.

It was a library copy because she didn’t want to buy it. The book fell open to the rape scene because everyone had read it and the pages had been opened so often.

I think Rand knew that the scene would make people talk about the book.

I think all of the gender and sexuality material is a mess. She states theories that are incoherent.

It reminds me of Friedrich Nietzsche, who had strong opinions about women and relationships and wrote about the roles women should play, even though he had difficulty finding romantic and sexual relationships himself.

You have to take the analysis of power dynamics in relationships from these figures with a grain of salt when they failed in many ways in their private lives.

You do.

Would you consider Ayn Rand a feminist?

She was almost an anti-feminist.

Someone wrote to her asking whether there should be a female president. This was at the beginning of the feminist movement.

Rand said no woman should be president because if she were president, she wouldn’t be able to look up to any man. She would be so powerful that she would become corrupt and rotten in the soul and would be unfit to lead.

It makes no sense.

At the same time, she was a woman and one of the most powerful intellectuals of the 20th century.

The very fact that she was one of the most powerful minds in history means that she was a feminist in spirit, in what she embodied and represented.

She lived the ideals of individualism and set aside gender norms in her own life. But she didn’t see herself as part of a movement, acting for the benefit of other women, or trying to change society’s views of women.

There was no collective essence to it. If feminism has a collective aspect, or at least requires identification with a broader category of women and a sense that one is acting on their behalf, then she definitely wasn’t doing that.

She was fair to women in her life and promoted them, but she was very negative about feminism. She said feminists dressed terribly.

There are also homoerotic themes in her writing, and many gay men were drawn to her work for that reason. She would then say that homosexuals were dirty and terrible people.

There’s a body of literature about gay men wrestling with Rand and her views of homosexuality.

It’s difficult to make sense of. If I want to be charitable, I think about the enormous pressures she was under in the culture in which she was raised and the expectations placed upon her.

She couldn’t meet any of those expectations, and it came out in a tortured set of ideals that she tried to promote. She also lacked the ability to introspect. It may have been too painful.

She rationalized her way through it, and the result was a set of strange theories.

Why is Ayn Rand almost never mentioned in lists of the great thinkers in history, the great thinkers of the 20th century, or even the great female thinkers of the 20th century?

You see Simone de Beauvoir and Hannah Arendt. You almost never see Rand on those lists.

Many people deeply dislike Rand and her ideas. They don’t think her ideas are profound because they’re disconnected from other ideas and understandings of human society.

You could say that her ideas are provocative and deep because she takes nothing for granted, flips everything around, and forces you to think. Her critics see them as absurd.

She doesn’t knit herself into an intellectual community in the way that other thinkers do. You can see who those thinkers influenced and who they were in dialogue with.

My book was one of the first to take Rand and say that she was a figure in American history, that she was connected to other people, and that she influenced them.

I received pushback for that. People are more open to it now, but those who compile these lists often dislike her work and think it’s shallow.

They find her fiction overdrawn and her work in the mythic register too simple. She was also a grand systematic thinker in an age that had moved beyond systems.

She was creating an inverse Marxism. Marx wrote in 1848 and wasn’t a thinker of the mid-20th century.

The lack of a legacy and the dislike of what she had to say are part of it. People feel that her insights aren’t insights because they’re too idealized, rather than being rooted in a plausible theory of human nature.

You study and write about the history of ideas in the United States over the past 100 years and more.

How do ideas evolve and gain power over the public, government, and culture? Looking at the way ideas dance, challenge each other, and play out in public discourse, what is the mechanism by which they take hold and have influence?

There are a few ways it happens.

I’m interested in the relationship between the thinker, the reader and interpreter of the ideas, and the conditions on the ground that make the idea resonate or not resonate.

As an intellectual historian, I study ideas in their historical context. What’s happening that makes these ideas resonate? What makes people seek them out?

In Rand’s case, she had credibility because of her experience of communism, which was one of the defining moments of the era. The idea came out in a pure form, and other people reworked and reshaped it as they read it.

I’m interested in how people form communities around ideas. A group of people started calling themselves Objectivists and gathering to read Rand’s work. That was spontaneous, bottom-up, and unsupported by money or central planning.

Friedman is a different case. He joined an established tradition of thought that had been institutionalized in universities. People signed up, paid money, and earned credentials to learn those ideas.

Those are 2 different ways ideas spread. Rand’s ideas were more bottom-up. People encountered them in a book, were blown away, absorbed them, and then perhaps began to look differently at Franklin Roosevelt or Barry Goldwater.

With Friedman, the ideas spread more top-down. People knew they were being positioned within an elite discourse of economics.

The ideas then encountered events. Friedman’s ideas might not have gone anywhere without stagflation, which made people see that his ideas had been proven.

Rand’s ideas caught fire in Cold War America, which was looking for a statement about what it meant to be an individual in a mass society.

It was also a time of great social conformity. People worked for large corporations, served in a large military, and lived in a United States that was becoming a global power.

What did it mean to be an individual in a world where everything was becoming bigger? That’s where Rand’s ideas caught fire.

I think about how ideas trickle through different levels of society and how they collide with experience. That’s critical.

What happens when ideas take power in government? Think about Marxism and how it evolved into the Bolshevik Revolution, or Nazism and Hitler, where a small number of people get excited about an idea and it becomes viral and takes power.

When I think about communism and its historical path, it has echoes of Rand. In its pure form, it’s almost a rationalist ideology. It’s an analysis of history and how things are supposed to be.

Hannah Arendt has one of the most penetrating analyses of communism. She puts it in the category of a logical ideology. Logic leads inexorably to its conclusions, but experience is different.

What does a cult of rationality do when it encounters experience? It tries to bend experience to its will. That’s the story of communism writ large.

The question is why it catches fire and draws people into political allegiance. In the case of communism, it’s the dream of a more ethical world, equality, and the powerless rising against the powerful.

That draws in many people. Leninism then adds an international cast, helping people think about the relationship between poorer and richer countries and what they can expect from one another.

It provided a framework in a period when the world was becoming more interconnected and differences were becoming more obvious.

Fascism is different. To me, it unleashes something more primal and dark within people. It gives them permission to indulge in impulses that are normally channeled or suppressed.

Going back to Rand’s lecture, what rings true is that communism may be fueled by resentment or envy toward the people who have and the people who don’t have.

Nazism has something similar: envy and resentment toward a group. In an environment of hard economic times, the primal emotion of seeing someone who has something you don’t can combine with a narrative and become viral.

Communism is animated by the idea of injustice—the world is unjust and should be different.

Fascism is more about scapegoating. We identify the source of the problem as a particular group and say that group must be punished for what it has done to the rest of us.

In 1984, there are the Two Minutes Hate. Everyone becomes excited about hating a particular thing.

There’s something primal about human beings. Once you’re in a state of hate, that hate can be directed toward any group, idea, or thing. You can get caught up in the mass hysteria of hatred.

It’s dangerous.

You’ve floated the idea of writing your next book about postmodernism, which is almost the opposite of Rand’s philosophy. Can you explain your curiosity about that space of ideas?

In the broadest sense, 2 dimensions guide me in doing intellectual history.

One is how an idea goes from a book in an elite space into popular dimensions. What happens to the idea along the way? How is it distorted or changed?

The other is the search for meaning in a post-Christian or secular era. What are people coming up with to replace the void in their religious or spiritual lives?

Both Rand and Friedman offered alternatives. Objectivism was a quasi-rationalist religion. People sometimes treat economics as a theory of the world, and it can almost take the place of religion.

With postmodernism, I was struck by the fact that the original postmodern thinkers are very difficult to read. I make my students read them, and they suffer. It’s worthwhile, but not fun.

Somehow the ideas trickled down from Jacques Derrida to Tumblr. That happened with postmodernism in a way similar to the transition from Friedman’s economic theory to Free to Choose on YouTube.

We had French theory at the top and Tumblr at the bottom. That was interesting.

Postmodernism is also a structure of meaning. I think it followed the same path as Objectivism, turning into its opposite after being distilled into popular form.

Objectivism was a group of people who considered themselves individualists but became deeply conformist to the dictates of a charismatic leader.

Postmodernism began with disrupting binaries. It was supposed to be fluid, to go beyond borders, and disrupt binaries. In its popular form, it has become the reinscription of many binaries: oppressor and oppressed, for example, as a dominant way of understanding the world.

The dynamics are very similar. There’s a movement from the pure form to the popular form, and then the idea is politicized or mobilized.

Behind it all is a human longing for meaning and the inadequacy of traditional ways of meeting that need.

Going from the pure form to the popular form reminds me of reading Derrida and Foucault in college without knowing the context. You can read a pure encapsulation of an idea and simply hold it in your mind.

But when that pure idea creates a community around itself, you realize what it actually becomes.

Exactly. You see the same pattern repeatedly.

Your research process for the biographies of Friedman and Rand seems like an enormous amount of work. You did incredible work with the original sources.

What does it take to persevere for so many years and go so deeply into those sources?

I go to the archive. That’s where I feel I’m communing with the dead. I’m seeing what they saw and reading what they felt.

I tell my doctoral students that it has to be something that gets them out of bed in the morning. There comes a point in a doctoral career when nobody is telling you where to go or what to do.

You have to get up because you’re interested in what you’re studying.

With Rand, I had a real sense of discovery. I wanted to know about this woman and where she fit. The only way to find out was to do the research.

I like to go deep. I did both of these projects within institutional structures. The first was a graduate program in history at the University of California, Berkeley.

I had coursework, structure, and people to check in with and read my work, but I also had considerable latitude. I’m grateful for that.

Could you linger on that? When you said you were writing a dissertation on Ayn Rand at Berkeley, were people upset?

No. I had a friendly critic who took it upon himself to throw at me everything he thought the outside world might throw at me.

It might not have been possible 5 or 10 years earlier. The most important person I had to convince was myself because I knew it was an unconventional choice for the field and for a dissertation.

Once I convinced myself, I said I was going to do it and see what happened.

Because it was unconventional, it stood out. At the time, during George W. Bush’s second term, there was interest in conservatism generally.

People across the political spectrum felt that we didn’t objectively know enough about conservatism and that this was a problem. They were open to learning more.

I caught a wave in scholarship and in American culture in which people wanted to know more.

Ayn Rand is at least a gateway to conservatism.

I called her the gateway drug. People start with Rand, are taken by her, and absorb her worldview.

She takes the economic vision of Milton Friedman and puts it into the mythopoetic register. She fictionalizes it.

Once people absorb that, they want more. They learn more about the ideas behind the vision, or they become true believers and go to work for a politician, think tank, or political party.

There’s a lot of traffic in that direction. Not everyone who reads Rand takes in the politics. For some people, it’s simply a story or an episode in their lives.

But for others, it’s foundational and changes them. Those were the people I wanted to track. I wasn’t trying to write everything about Rand; I was writing about Rand and the American right.

My question was: where did the people who took her in a political direction take her, and what difference did she make?

Returning to your process, you show up, read the sources, and allow unifying ideas or special moments to emerge. Is that how it works?

With a biography, I’m given a start date, an end date, and a rough narrative of what happens. I have a high-level structure.

With both Rand and Friedman, I started by reading their major books before reading much about them. I wanted my own experience of the material to remain fresh.

I had read some Rand and some Friedman, but not a lot. I first read the major works to get oriented, then dove into the archives.

Who were they talking to? What was happening?

With Rand, I was interested in her time in the United States rather than her time in Russia because I didn’t have the language skills to research Russia.

I began when she published her first book and started receiving letters. Who was she writing to? Who was writing to her?

I began uncovering a world of conservatism and putting it together. Once I had enough material, I knew I had a chapter.

Then the book would come out, and I would ask what her life was like afterward. I would look for the material and build the next chapter.

Although I had a high-level structure, the book emerged from the archive and the material I found. If I didn’t find the material, I wouldn’t cover something in great detail. If something was outside my scope, I wouldn’t pursue it deeply.

You’re passionate about teaching. Friedman had an interesting way of teaching.

How do you think about teaching history and the history of ideas to young minds?

It’s inspiring. The dominating style Friedman used wouldn’t work in today’s university. It wouldn’t be permitted, and students wouldn’t respond to it.

I try to share my enthusiasm. That’s probably the main thing I bring: “Look how interesting these ideas are.”

I try to keep my own views out of the process and give the fairest possible account of each thinker. If I find someone disturbing, I might say at the end of the lecture that I find a particular idea unsettling and that it tells me something about myself.

Most of the time, I’m bringing students into the biography of a thinker and the context in which the thinker worked. We read the work together and discuss it.

I ask students what they’re finding and what jumps out at them. We break down the language and teach them how to read deeply.

I feel that’s my contribution. We’re having trouble reading collectively and paying attention collectively. I’m trying to cultivate those skills and model how I read a text.

I show them what jumps out at me when I look at Thomas Hobbes or another thinker.

I want them to see that studying the history of ideas is fun. I feel privileged to do it.

This is the time in life when students are figuring out who they are. Their minds are developing, and they can handle complicated ideas. They don’t always have the context, so I need to give them the difficult ideas and explain what was happening in the world around them.

I’m showing them the landscape. In a 10-week quarter, I can only give them a flyover. But I want them to know how to go deep and where they want to go deep.

They should do what Friedman did with a parallel curriculum and develop their own education.

What advice would you give about reading ideas you agree with and ideas you disagree with?

Although passion is important for teaching ideas, dispassion is more important for reading and understanding them.

People have said to me, “I could never write about Ayn Rand. She makes me so angry.” I’ve never become angry reading her. I think, “There you go again,” or, “That’s going to cause trouble.”

I approach her with a kind of charity but also without enormous expectations. I’m not expecting a revelation or expecting to agree. I can be clinical about it.

I also try to find the humor. There are funny aspects of these people.

When I teach Oliver Wendell Holmes, for example, I tell students that his father wrote a poem about him called “The Astræa,” portraying him as if he came from outer space.

I say, “This was his father’s view of his son. That’s how strange he was.”

I try to remain alert to those funny, human details. These were ultimately people with ideas that they spent enough time polishing and developing that we still want to read about them 100 years later.

What about the dramatic version of that question? Are some ideas good and others evil? Can we draw such lines, or is it more complicated, like the Solzhenitsyn line between good and evil that runs through every human heart?

I agree philosophically with Solzhenitsyn. Some ideas pull toward the good, and some pull toward the bad.

That may be why people dislike Rand so much. They feel that she gives license to the bad side and says it’s acceptable to be selfish. They feel she’s unleashing dark forces.

She also unleashes light forces in terms of reflecting on yourself and trying to be true to yourself.

There are ideas that are dangerous to play with, and ideas that give license to the darker sides of human nature. You can see that in the historical record.

In some places, such as Germany, people think ideas are so dangerous that they can’t be allowed to circulate. In some contexts, that may be true.

But even that has to be taken with a grain of salt because censoring an idea may be more dangerous than the idea itself.

A pothead question: do humans have ideas, or do ideas have us?

Where do ideas come from? You have Milton Friedman at Rutgers trying to figure out what he can do about the Great Depression.

I sometimes think ideas are aliens traveling through human brains, captivating us, and getting us excited. Like the monolith in 2001: A Space Odyssey, an idea lands and gets everybody on the same page. It reverberates through the community, leads to an implementation, and eventually we discover that the idea was bad.

Then we learn new ideas. It feels like the idea is running the show.

I think that’s true in many ways. Keynes had a famous line that most people are slaves to some defunct economist.

It’s difficult to have an original thought. We’re social creatures, we encounter similar situations repeatedly, and we’re born into traditions of thinking and being.

Most people will never question those traditions, and most will never become aware of them.

Part of the work of an intellectual historian is to make people aware—to show them that they’re carrying a map that orients them to the world in a particular way.

You have to work hard to have an original idea. Even then, it won’t be completely original. It will be a reworking and reassembling of ideas that others have had.

It’s possible to create autonomy in the realm of ideas and become an autonomous consumer of ideas, but most people aren’t. That’s fine. They want to have experiences and do other things with their lives.

Jennifer, thank you so much for this journey through ideas. Thank you for your incredible work. It was really fun and fascinating to talk with you.

Thank you.

Thank you for listening to this conversation with Jennifer Burns.

I’d like to reflect on some things I’ve been thinking about. A few days have passed since my interview with the president of Ukraine, Volodymyr Zelenskyy, and I’ve had time to think about the conversation itself, the response, future conversations, and what it all means for the war in Ukraine, global geopolitics, and humanity in general.

I’ve received many heartfelt positive messages from all sides, including, at least so far, literally everybody who knows me personally inside Ukraine. That includes many soldiers and high-profile figures, some supportive of the president and some critical of him.

All private communication has been positive and supportive. That’s usually not the case with me. Friends typically write to criticize and disagree. That’s the point of friendship: to argue and have fun doing it.

The most common message was: please keep pushing for peace. I will.

Online, however, I saw many attacks, sometimes from swarms of accounts, which made me suspicious about their origin. One of my friends in Ukraine, who believes the attacks were propped up by Ukrainian bot farms, said there was no need to say anything extra. He said to let the interview stand on its own and stay focused on the mission of pushing for peace.

He’s the Ukrainian version of my friend Joe Rogan, who says, “Don’t read the comments.”

That is generally good advice, and I try to follow it. But I’m also a human being. I wear my heart on my sleeve, and this interview and this war are deeply personal to me.

The amount of vital misrepresentation and lying about the conversation and about me personally was particularly intense and disingenuous, so I thought I would use this opportunity to say a few words about how I approached the conversation with President Zelenskyy and conversations in general.

This interview is something I poured my heart and soul into preparing for. I’ve described parts of the preparation process in the outro to my conversation with Zelenskyy.

In general, I read a lot, listened to a lot, and had many private conversations with people on the ground. I have many flaws, but being unprepared for this conversation isn’t one of them.

Two low-effort attacks got to me a little, if I’m being honest, although I’m learning to take it in stride.

The first was that I was unprepared, uninformed, or naive. I don’t care about the trolls, but I want the people who listen to me, support me, and care about my words to know that this isn’t the case.

It will never be the case for future conversations, especially conversations of this importance. I work extremely hard to prepare.

The second attack was that I was a shill for Zelenskyy or a shill for Putin. Both accusations were made by online mobs of every persuasion: the left and right in the United States and Europe; pro- and anti-Zelenskyy people in Ukraine or of Ukrainian origin; and pro- and anti-Putin people in Russia or of Russian origin.

As I’ve said repeatedly, this isn’t the case and never will be. I’m a shill for no one.

More than that, I refuse to be caught in a single echo chamber. It’s an ongoing battle because social-media algorithms and dogmatic groups want to pull you into the warm embrace of belonging.

Humans want to belong, but the cost of the path I’ve chosen is that I’ll never belong to one group. In the end, as many of us must, I walk alone.

I try to do what is right according to my independent heart and mind, not what is popular with any one group.

My goals for the conversation with President Zelenskyy were 2-fold.

First, I wanted to give him a large platform to explain his perspective on the war and to do so in a way that brought out the best in him as a leader and human being.

Second, I wanted to push for peace and give him every opportunity to signal that he was ready to make peace and to provide his vision for what that might look like.

By peace, I mean long-lasting peace that minimizes the suffering of people in the region and maximizes the flourishing of humanity in the coming decades.

The war in Ukraine has led to more than 1 million casualties, and the number is growing every day.

For some people who have been torn apart by loss and forced into anger and hate, peace is a dirty word. Nothing less than justice will be accepted.

I hear that pain. I’ve seen the bodies and the suffering.

Peace won’t bring back your loved ones, but it will prevent the further slaughter of people, each of whom is someone else’s loved one.

The second goal of the conversation was to push for that kind of peace.

Every conversation is its own puzzle. Let me explain my approach to this one.

Since February 24, 2022, I’ve read and listened to a great deal of material. There have been many weeks over the past 3 years when I spent more than 8 hours a day reading and researching.

There were several rabbit holes I returned to consistently, but the most important line of inquiry was peace talks—not just in this war, but in other modern wars.

For this specific war, I took notes on every perspective I could find about every major diplomatic meeting and negotiation in Ukraine-Russia relations since 1991.

There is a lot of material, and there are many perspectives, including on the 2019 meeting President Zelenskyy discussed in the podcast.

As one small but important example, Andriy Bohdan was interviewed twice by Dmytro Gordon and gave an inside look at the administration of President Zelenskyy. The 2 interviews are 7 and a half hours long and are a master class in interviewing.

Bohdan worked directly with President Zelenskyy as head of the Office of the President of Ukraine. He was present at the 2019 face-to-face meeting between Volodymyr Zelenskyy and Vladimir Putin at the Paris Summit, along with French President Emmanuel Macron and German Chancellor Angela Merkel.

That meeting was part of the Normandy Format peace talks.

In those interviews, Bohdan gave a very different perspective on that 2019 meeting from the one President Zelenskyy gave me. His perspective was that the failure to negotiate a ceasefire and peace wasn’t a simple, one-sided story.

I don’t think this is the right time to dive into that data point and criticize. I’m not interested in criticism for its own sake. I’m interested in productive conversations, critical or otherwise, that push toward peace.

This was merely one data point I was collecting. There are many others. Taken together, they made it clear to me—and I still believe this—that it is very difficult but possible to negotiate a long-lasting peace with Vladimir Putin.

It’s certainly true that Ukraine is best positioned to negotiate from a position of strength after the invasion of February 24, 2022.

I believe there were 3 moments when peace was most achievable.

The first was March and April of 2022, after the successful defense of the north.

The second was the fall of 2022, after the successful counteroffensives in Kherson and Kharkiv.

The third chance is now.

Donald Trump has stated publicly multiple times that he’s interested in making peace. It’s likely that U.S. financial support for the war will continue to dwindle.

The leverage and timing for peace negotiations are now present. There’s unlikely to be another chance like this for a long time.

To zoom out on the conversation, I interviewed Donald Trump and may do so again. I interviewed Volodymyr Zelenskyy and may do so again. It also seems likely that I’ll interview Vladimir Putin in Russia, in the Kremlin.

I understand the risks and accept them. The risks to me aren’t important. I’m not important.

I want to do my small part to push for peace at a moment in history when there’s a real chance for peace to be achieved.

I may be speaking too long, but I could speak for many more hours. This is me trying to be brief.

My goals were to bring out the best in President Zelenskyy as a leader and human being, and to give him every opportunity to signal that he was ready to make peace and explain what that peace might look like.

Step 1 through Step 10 is preparation. I prepared well.

Step 11 is the conversation itself. The psychological and personality characteristics of the guest matter a great deal.

My job is to cut through the walls we put up as human beings and reveal, directly or indirectly, who the person truly is and how they think.

Zelenskyy is a deeply empathic and emotional human being who personally feels the suffering of the people of Ukraine.

That’s a strength and perhaps also a weakness, but it’s an important part of why I’ve said many times that he’s a historic figure.

Very few recent leaders could have done what he did: stay in Kyiv, unite the country, and convince the West to join the war effort to the degree it did.

He’s also a showman, to borrow the title of the biography I recommended. He has many layers of humor and wit, but also ego and temper.

He can be self-aware, but he can also lose himself in the emotional roller coaster of a painful memory or a turn of phrase that serves as a springboard for an angry soliloquy.

We hadn’t agreed on what we would discuss or how long we would talk. The interview could have lasted 5 minutes or 3 hours.

I had to gain his trust quickly enough for him to open up and remain in a long-form conversation, while pushing him enough to reveal the complexities of his thought process and situation.

Humor and camaraderie were essential, and I returned to them often, although it was difficult given the stakes and the heaviness of the war.

The approach I followed was to use constant nudges and questions about peace, often in the form of almost childlike statements or questions.

I like those kinds of questions. On the surface they may seem naive, but they’re not. They’re often profound in their simplicity, like many questions children ask.

Remember that it was a child who pointed out that the emperor wasn’t wearing any clothes.

I like the simplicity, purity, and boldness of those questions because they can cut through to the truth.

The truth is that hundreds of thousands of people have died in this war and are dying every day. All the other problems—from corruption to suspended elections to censorship—cannot be solved until peace is made.

I gave the president every opportunity to signal a willingness to negotiate, knowing that both Trump and Putin would listen to the conversation.

I don’t think he took that opportunity. Instead, he chose to use crude words about Vladimir Putin.

That’s understandable, but it’s not directly productive for negotiation.

I’ve hosted many conversations that were intensely critical of Vladimir Putin, from Serhii Plokhy to Stephen Kotkin. But this was a conversation with one world leader about another world leader during a historic opportunity for peace.

Crude, disrespectful words, while powerful, may harm negotiations.

Peacemaking in this situation requires compromise to avoid further death and suffering. It requires treating the other leader with the seriousness you expect him to treat you with.

That’s what I was pushing for while also setting my ego aside and letting the president shine, which was necessary to accomplish both of my goals.

That’s also why I wanted the president to speak about Elon and Trump—to extend the olive branch toward further avenues of peacemaking.

This isn’t about politics. It’s about peace.

Some online mobs took my words out of context and attacked me. For example, President Zelenskyy said in a mocking tone that he thought Vladimir Putin was simply irritated by the fact that people in Ukraine were alive.

I answered, “If you believe this, it will be very difficult to negotiate. If you think the president of a country is completely crazy, it’s very hard to reach an agreement with him.

“You have to look at him as a serious person who loves his country and loves the people in that country, and who conducts destructive military actions.”

The president interrupted me and said, “Who are you talking about now? Who loves this country?”

I said, “Putin.”

He asked, “Do you think he doesn’t love his country?”

The president answered, “No.”

This wasn’t a podcast conversation with a historian or an activist in which I had randomly waxed poetic about Putin’s, Zelenskyy’s, or Trump’s love of their nations.

It was a conversation with a world leader about the opportunity to negotiate peace while large numbers of people are dying every day.

Even if your heart is boiling with hate, leadership now requires sitting at the negotiating table and compromising.

That may be painful, but it’s necessary.

There were several other places in the conversation where online mobs took my words out of context and used them to call me naive and demand more war. They said peace was impossible with a man they described as the second coming of Hitler.

My friends, if you make those attacks on this conversation, it’s you who are naive and ignorant of the facts of history and geopolitics.

Peace must be made now for death and suffering to stop, for Ukraine to have a chance to flourish, and for the drums of global war to stop beating.

A global war would destroy humanity.

That was my goal, and I’ll continue this effort to the best of my ability. Thank you. I love you all.