Tyler Cowen: uncertainty

Transcript context

…Well, I think Britain — one, it had a preexisting set of ideas that was called monetarism, which actually wasn’t Friedman-inspired but linked up with him very closely. I think Friedman actually had more and less influence. The presidential lecture he gave in 1967, saying there wasn’t a long-run tradeoff between inflation and unemployment — there are definitely several key figures in the British political establishment who found that made a big impact on their thinking because they felt like they were living that. “We’ve been trying to spend money to bring down unemployment, and now we’ve spent all this money, and unemployment is still going up, and inflation is going up.” In a lot of ways, Friedman seemed to be explaining what was happening in Britain, and it happened sooner. On the other hand, he also became a symbolic figure very quickly in British politics because the British monetary system is different. It was different at that time, so his advice wasn’t technically suitable in many ways. Secondly, he became a much more prominent figure after the Nobel Prize and after his controversy over his connection to the Pinochet regime in Chile. He then became a whipping boy of left and right. He does have, one, a substantive intellectual impact, and two, a symbolic impact. I don’t think his celebrations of individual freedom maybe have the same cultural resonance in Britain as they do in the United States. In the United States, he’s in some ways tapping into the rugged-individualism, frontier spirit. We’re Americans, and we’re free. He’s got more of that to play with than I think he did have in Britain. You don’t see “capitalism” and “freedom” falling off people’s lips in the same way in England as it did in the United States. There’s a debate in one of the episodes of Free to Choose where Peter Jay, who is British, takes on Milton Friedman. I don’t know if you remember this. Jay says, “Well, Milton, you’re always inconsistent. You cite utility when you want to make an argument, but when utility’s not on your side, you switch back to liberty. Which is it? Which one is your master?” Was Peter Jay right? Was Milton wrong? What’s your view? I love that exchange because if you recollect, Peter Jay keeps pushing, and finally Friedman says — I think this is verbatim — “Freedom is my God.” I was like, “Wow, freedom is your God.” I expected the lightning bolt to come down. It was very intense, but I think that is ultimately it. Friedman didn’t want to believe you had to choose between freedom and greater prosperity, between an unregulated economy and widespread differentials of wealth. He really didn’t want to make that choice because, one, freedom was his God, and two, he was not an egalitarian, but he definitely was concerned about those who had less, and he wanted there to be fewer poor people. He didn’t really want to confront that tension. He spent a lot of time trying to massage it. I think that’s where his interest in what we would call UBI comes from. The other thing I really do want to stress is, in his era, it looked plausible that you didn’t have to choose. In other words, it’s the era of the convergence of incomes. It’s the era where, as countries develop economically, their income inequality goes down, so he’s seeing a very different set of figures than we look at today. As a result, he was much more optimistic that the more capitalism spread, the more inequality would decline, the better off everybody would be. He really didn’t wrestle very much, although he started to a bit at the end of his life, with the conundrum, what if capitalism spreads and things get worse for a lot of people? What do I do then?…

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