Latest / The Capitalism and Freedom in the Twenty-First Century Podcast / Milton Friedman, The Chicago School, and The Government’s Incentive To Promote Economic Growth

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Milton Friedman, The Chicago School, and The Government’s Incentive To Promote Economic Growth · The Capitalism and Freedom in the Twenty-First Century Podcast

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  [MUSIC]
• 0:40
  >> Jon Hartley: Welcome to the Capitalism and Freedom of the 21st Century podcast
• 0:44
  where we talk about economics, markets, and public policy.
• 0:47
  I'm John Hartley, your host.
• 0:49
  Today I'm joined by David Mitch, an economic historian and
• 0:52
  professor of economics at the University of Maryland, Baltimore county.
• 0:56
  I'm so thrilled to have David on the podcast because he is an amazing economic
• 1:00
  historian who's done fantastic work on economic growth,
• 1:03
  as well as the history of economic thought.
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  And knows all sorts of details about Milton Friedman and
• 1:08
  the University of Chicago that I had never heard before.
• 1:11
  Welcome, David.
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  >> David Mitch: Thank you, John.
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  Delighted to be here.
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  >> Jon Hartley: Okay, David, so just to jump in here,
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  where did you grow up originally and how did you get interested in economics?
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  You were both an undergraduate and
• 1:25
  an economics PhD student at the University of Chicago.
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  What is your early life story that got you interested in economics and in particular,
• 1:35
  economics at the University of Chicago?
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  >> David Mitch: Okay, thank you for the question.
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  So, I was born in Akron, Ohio.
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  I actually spent the first six years of my life in New Zealand.
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  My dad worked for BFGoodrich, a tire company, and
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  so he was sent down there to work with a tire company down there.
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  So, I came back when I was six years old, and then continued on then in a suburb of
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  Akron, Ohio, so that's where I went to high school.
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  I think what stimulated initially my interest in economics was my,
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  he was an engineer, but he also got an MBA degree from Kent State University
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  doing stuff on the stock market, doing Chartism with stocks.
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  But it was his copy of Samuelson's economics book
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  that sort of first got me interested in economics.
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  So I had that interest.
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  >> Jon Hartley: That's the famous economics textbook that I think
• 2:32
  at one point in its earlier stages.
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  Well, I think it's one of the original sort of principles of economics book that
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  sort of succeeded, I guess,
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  Alfred Marshall's sort of original principles book.
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  And then Samuelson's book was obviously succeeded
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  by Greg Mankiw's principles book.
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  But I remember famously in some of Samuelson's earlier books,
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  he projects like economic growth for the USSR to overtake economic or
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  the GDP of the US, and of course that never happened.
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  And it's interesting thinking about all these projections in the night,
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  talking about economic growth and economic history.
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  For a while, I think in the 1980s,
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  some thought that the GDP of Japan would eclipse that of the US.
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  And for a long time over the past couple decades, people said the same about China,
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  and we'll see what happens.
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  So, you grew up in Ohio, and then you went to the University of Chicago,
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  and you spent over a decade there, both doing your undergrad and PhD studies.
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  What was the department like then?
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  And who were your advisors?
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  And what got you into economic history?
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  >> David Mitch: Okay, so I started there in 1969.
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  And actually at the time they had a very famous set of economic historians.
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  Robert Fogel, who later won the Nobel Prize was there.
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  Deirdre McCloskey was there at that time doing British economic history.
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  And also the person that really got me interested in economic history was
• 4:07
  a Russian economic historian named Arcadius Kahan.
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  And I actually remember my very first quarter, I think it was.
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  And in the maroon, they used to put in advertisements for seminars.
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  And by some fluke, there was something about the economic history seminar.
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  And so I went to that.
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  One of my classmates who also went, who was since gone on to do quite well,
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  his name is Gary Hoover, who I think has a dormitory named after him.
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  So we both showed up just as basically first year undergraduates at this economic
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  history seminar, and it was a very, very stimulating, lively thing.
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  So that sort of first got my interest in economic history,
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  that was sort of my first exposure to it.
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  And I also remember in the general social science course that I took
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  that we did hear Milton Friedman lecture as well as George Stigler.
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  And actually, one of the episodes I remember from this, this was 1969 to 70,
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  and there was a lot of protests going on about the Vietnam War, and
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  in general about the establishment.
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  And Friedman was often the target of those protests.
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  So, I remember a lecture that he gave and was disrupted by these protesters.
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  And they came in and they started going on this big rant about socialism and
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  injustice and all the problems with the capitalist system, and they went on and
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  on in this rant.
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  And the students in the audience started laughing.
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  And the person going on, how can you laugh at these things like poverty,
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  injustice, racism and so on?
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  How can you do that?
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  And Milton Friedman's response was,
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  they're not laughing at any of those things, they're laughing at you.
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  >> Jon Hartley: That's too funny.
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  I remember when I was a University of Chicago undergrad,
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  I remember Friedman had passed at that point, and also he had
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  long left University of Chicago back in the 70s after he won the Nobel.
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  But I remember Bernie Sanders, Senator Bernie Sanders, coming to campus and
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  protesting the Milton Freedman Institute, or now what's known as
• 6:09
  the Becker Freedman Institute, which is really just a research institution and
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  not even really much of a public policy think tank.
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  But I remember just this massive campus wide uproar over that.
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  So, it's interesting that Milton Friedman was certainly, I guess,
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  a controversial figure on campus from the beginning, from his early days.
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  That's fantastic and interesting, too, thinking about these seminars.
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  I know Chicago sort of seminars and workshops were sort of famous for
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  having one professor that was usually sort of the king of these workshops.
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  It'd be Harry Johnson and the international workshop, or
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  Friedman and the Money Macro workshop, and later Lucas running that.
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  It was very, I think, driven by one person, whereas today,
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  if you were to go to a lot of graduate student workshops,
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  maybe there'd be a few faculty members in it.
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  And certainly, I think few could, I think, match, people like Friedman,
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  who would notoriously get everyone to read through every page, and
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  would cold call people, cold call students.
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  And if a student said, I don't know, I have to think about it, he'd famously say,
• 7:23
  well, why don't we think about it now?
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  And would try and get people to try and think on the spot.
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  You recently published a very interesting paper in the Journal of Political Economy
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  titled A Year of Transition, Faculty Recruiting at Chicago in 1946.
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  And it's such a fascinating piece of really the history of economic thought and
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  the history of University of Chicago's economics department,
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  in which you point out that Milton Friedman was actually almost not hired by
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  the University of Chicago.
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  I mean, it's crazy to think what would the University of Chicago's
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  economics department have looked like without Friedman?
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  Would it even still sort of have been thought of as its own school of thought
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  and so forth?
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  Can you explain a little bit more about how Willem Friedman was actually almost
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  not hired to the University of Chicago's economics department?
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  And actually who the other runner up was, who would have actually
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  kind of gone in the totally stark opposite direction from what
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  at least Milton Friedman's economic and political views were?
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  >> David Mitch: Well, to set the context.
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  So you mentioned 1946, and actually,
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  I start the article by pointing out how dismal things look for the department.
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  This was in January, February of 1946, and
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  Frank Knight wrote this letter to colleagues who were not there,
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  explaining what the misery was of the situation, which was.
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  >> Jon Hartley: Frank Knight of 19, uncertainty at old Chicago school.
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  He was on the faculty since maybe the 1930s or something.
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  >> David Mitch: Even a little bit earlier, yeah.
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  But he pointed out that, first of all, the really big star at the time,
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  Jacob Viner, had just resigned to go to Princeton.
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  Also, the longstanding chair of the department, Simeon Leland,
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  had just resigned to take a position at Northwestern.
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  And so then the issue was, what were they gonna do?
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  And they did have a number of faculty hiring spots.
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  So the issue was sort of how to go about doing that, who would they hire,
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  and so on.
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  And so they had a long list of possible people.
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  And in deliberating on that, what has been noted by others before I sort of
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  wrote about this is there was actually a quite diverse group within the department.
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  So there were some longstanding, what could be called more
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  institutionalist types, like John Neff would be one example.
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  There was also a group associated with the Coles foundation that
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  were much more technical, focusing on econometrics.
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  Some of them actually had more, such as Jacob Marshak and
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  Oscar Longa had much more central planning orientations.
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  And then there was a group.
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  >> Jon Hartley: I guess they left campus because of a big dispute with
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  Milton Friedman.
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  And they went to Yale, right?
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  >> David Mitch: Eventually, eventually, but
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  at that point, they were still very active.
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  But then there was also the group with Frank Knight,
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  which included Frank Knight himself, and then Henry Simons, Lloyd Mintz.
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  I'm thinking those were the.
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  Actually those were the kind of more prominent people, but
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  then there were others like.
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  And one of the things my research uncovered is that they were clearly
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  aligned with H Greg Lewis, the famous labor economist who was also in that camp.
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  And so they each had their own sort of set of candidates, but
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  they went through several rounds of deliberation, and in terms of
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  the rankings it was a clear no way first choice that all the groups agreed on.
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  Maybe Frank Knight a little bit less enthusiastically than the others.
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  And this was John Hicks, who had risen to prominence, was at first London School
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  of Economics, and then at Oxford, did subsequently win the Nobel Prize.
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  So that was their sort of first target, was John Hicks.
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  >> Jon Hartley: [INAUDIBLE] demand and value in capital,
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  which is sort of putting into Keynes, into more formalism.
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  And he was, I think, very much a big part of sort of popularizing,
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  which would have been a totally other stark direction to take the department in.
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  But there were others, too, who.
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  >> David Mitch: In fact, actually, as I recall,
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  there were three slots they were trying to fill.
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  So they had three candidates that were sort of their first round choices.
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  So the first was Hicks, who reasonably promptly turned down the offer,
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  said he wasn't prepared to move.
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  Then the second one was Albert Gail Hart, who at the time was based at Columbia and
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  was a somewhat recent graduate of the University of Chicago.
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  His area was more in monetary theory and macroeconomics.
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  And then he finally decided he was gonna stay at Columbia, did not really,
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  wasn't prepared to make the move.
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  And then the third choice, and this was really the one that the Frank Knight
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  camp was pushing for as far in the way, their first choice was George Stigler.
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  And so they did agree, begrudgingly.
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  The Coles foundation camp agreed to go along with this.
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  And so the department then wanted to make an offer for Stigler.
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  But as is the case then, I'm currently department chair,
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  I'm familiar with the hiring procedures.
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  Before the department could make an offer,
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  they had to get approval by the central administration.
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  And what happened is Stigler did have his required interview with
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  somebody from the central administration.
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  It was supposed to have been Robert Maynard Hutchins, who was sick that day.
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  >> Jon Hartley: That the famous University of Chicago president who transformed
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  the university and sort of got rid of D1 sports and famously leveled the football
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  field and built a massive library on top of it, the Regenstein Library.
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  >> David Mitch: And so he was not available.
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  So then his replacement, the fellow's last name was Caldwell, as I recall,
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  I have to look in the article to get his first name.
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  He basically came from a theology background.
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  But anyway, he was not very impressed by Stigler.
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  Stigler, in his memoir, said he thought that Colwell thought he was too empirical.
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  That wasn't the issue that I found, the memo that Caldwell wrote to Hutchins,
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  just saying that he was reasonably intelligent, but
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  he just was not sort of a top level quality of somebody like Viner.
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  >> Jon Hartley: Too funny, and
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  I guess Sigler would end up going to win the Nobel.
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  And I don't think Viner ever did.
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  >> David Mitch: Well, he passed, probably in the very early days.
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  I think he passed away about 1970, and
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  that was just as the Nobel was getting started.
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  >> Jon Hartley: Right, right, but I guess George Stigler was also sort of a bit
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  of a controversial professor on campus as well.
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  He focused quite squarely on regulation and
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  these sorts of public policy issues, much more so than Friedman,
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  and I guess is a big part of that sort of free market camp.
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  But I guess at some level, too,
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  he was very interested in how incentives shaped regulation, too.
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  >> David Mitch: What is sort of ironic to discuss the sort of post mortem of what
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  happened.
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  Stigler was known for his wit and humor and all this, but
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  the way somebody described that interview is that, in fact,
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  Stigler took more seriously what Caldwell was asking,
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  where they thought that Caldwell was asking some questions tongue in cheek.
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  And Sigler didn't quite grasp that in terms of how things came across.
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  So that part possibility got mixed.
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  So that left sort of two remaining finalists,
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  which were Milton Friedman, but the other one was Paul Samuelson.
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  >> Jon Hartley: Wow, another stark opposite contrast from what you would
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  associate to be the Chicago school or sort of somewhat free market orientation.
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  >> David Mitch: And so what happened is the Coles people were very strongly
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  lobbying for Samuelson the night people were strongly lobbying for freedmen.
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  And then there were people that were sort of in the middle, like TW Schultz and
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  some others, that sort of had mixed views one way or the other.
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  And they were both brought for interviews.
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  Actually, what happened is Freedman made a very positive impression on everybody,
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  including the administration.
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  So they reasonably promptly made an offer to Friedman.
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  Samuelson was brought in.
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  And I think in general, the department, even though there was opposition.
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  Was prepared to make him an offer, wanted to do it, but as was Stigler,
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  he made a very negative impression on some of the administrators.
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  And there was this famous line that I think Hallwell sent to Hutchins
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  about what Hutchins made of, and Samuelson, by the way,
• 16:16
  was a University of Chicago undergraduate.
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  >> Jon Hartley: [CROSSTALK] He was undergraduate, right, undergraduate.
• 16:21
  Where a lot of his passion for economics was nurtured at an early age.
• 16:26
  I think he grew up in Nydpark, too, I think maybe.
• 16:32
  >> David Mitch: I think Gary, Indiana.
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  >> Jon Hartley: You're right, but, yeah, close enough that I think he,
• 16:36
  as a high school student or something like that,
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  was going to seminars at the University of Chicago or something like that.
• 16:42
  And also eventually Nobel Prize winner, too, but
• 16:46
  certainly somebody that you'd heavily associate with Harvard,
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  MIT, and Cambridge that have historically, I suppose, more of or at least not
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  quite a free market orientation that Chicago is famous for, to say the least.
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  >> David Mitch: But anyway, Hutchins didn't make the interview with Samuelson,
• 17:08
  and then later he had to go out of town, so
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  that preserves sort of the record of what Hutchins made of Samuelson.
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  And Caldwell asked Hutchins to say what had commented, Hutchinson and
• 17:19
  telegram back said, well, my opinion of Samuelson hasn't changed.
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  He's a vicious character with a high IQ.
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  >> Jon Hartley: I mean, this is just amazing.
• 17:29
  >> David Mitch: And so, actually,
• 17:30
  if I could finish, even though there was this negative reaction,
• 17:33
  the department still did succeed in making an offer to Samuelson.
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  But then Samuelson decided not to accept it, basically, at that point stated MIT.
• 17:41
  >> Jon Hartley: And do you know why he didn't accept it or not clear?
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  >> David Mitch: I think there's been a separate track writing about that,
• 17:52
  some have written about that, and
• 17:54
  there's a volume on MIT economics about some of the considerations.
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  But I think part of it is, and they did try later on to
• 18:02
  also make him an offer a few years, 47 and 48.
• 18:09
  And my sense is that he thought he had really a good arrangement at
• 18:13
  MIT in terms of being able to control and build up the department.
• 18:18
  And I think he would have had some awareness,
• 18:21
  there would have been some resistance to what he would be trying to do at Chicago.
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  >> Jon Hartley: I mean, it's fascinating, too,
• 18:29
  to think just part of how MIT and Chicago, both as universities,
• 18:34
  rose in getting sort of dominance in the academic sphere was in part because,
• 18:40
  unlike Harvard and many other older schools, they weren't applied
• 18:45
  by antisemitism to the extent that some of these other schools.
• 18:50
  And I think that had something to do with Paul Samuelson not getting
• 18:55
  hired by Harvard when he first went on the market after graduate school.
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  I guess I'm curious, just from somebody that's interested in history,
• 19:04
  how do you know all this?
• 19:06
  I mean, what as an economic historian, and
• 19:09
  particularly one that's written a paper and
• 19:13
  done a big project like this on understanding economics department,
• 19:18
  hiring, and voting, and what was going on behind the scenes?
• 19:24
  Do economics departments keep records of these things?
• 19:27
  I've never been on a hiring committee,
• 19:29
  and I've only been an economics graduate student undergrad.
• 19:33
  But are all these sorts of decisions being logged and
• 19:40
  being archived, and so forth?
• 19:44
  >> David Mitch: Well, they do keep records, and that's what I base this on.
• 19:48
  So it's spending extensive time in University of Chicago archives, and
• 19:52
  Department of Economics has its own set of files there.
• 19:55
  It's kind of hit or miss what they actually keep and
• 19:58
  what they are required to keep.
• 20:00
  And it was sort of a fluke in 1946 that this particular vote,
• 20:06
  there actually was a record kept of the voting by faculty member.
• 20:12
  And what further makes it interesting, the way they actually,
• 20:17
  you can do votes in different ways about how you rank or
• 20:21
  how you set up the choice among candidates.
• 20:24
  But the way that this particular set of decisions was made was through what could
• 20:29
  be called a board account, where basically each of the faculty member voting,
• 20:35
  they don't just vote yes or no or whatever.
• 20:38
  But depending on the number of candidates,
• 20:40
  then they give points according to what the preference is of the candidate.
• 20:45
  So you can either give the number 1 candidate a number 1, or if there are five
• 20:49
  candidates and you get a number 5, there's actually a measure of the intensity.
• 20:53
  So it's not just the number of votes, but
• 20:55
  it's actually the intensity of voting that counts in terms of the overall sum, then.
• 21:01
  >> Jon Hartley: I guess the board accounts,
• 21:03
  one famous way to sort of overcome arrows and possibility theorem.
• 21:08
  I think when you do that, you relax one of the constraints,
• 21:13
  but a way to get, I guess, optimal voting on house.
• 21:18
  But I'm still just amazed that you could go to an economics department and
• 21:23
  they would give you these records.
• 21:26
  I'm sure if I went to the Stanford economics department and asked for
• 21:31
  the tenure vote on recent faculty, on who voted for who,
• 21:34
  there's no way on earth that I would be getting, I'm not even sure in this day and
• 21:40
  age whether they track these or it's voice vote or I.
• 21:43
  It's your point, maybe some departments do voting
• 21:49
  by ballots versus others by hand or boys votes.
• 21:56
  >> David Mitch: Well, a lot of this depends, actually, on the archivist and
• 22:00
  the way they set up the records, and
• 22:02
  also the conditions under which the records are donated.
• 22:06
  Quite commonly, there are restrictions on when the files could be opened up.
• 22:12
  That was the case, actually, with TW Shultz's papers, who was chair for
• 22:16
  many years.
• 22:17
  And there were certain papers that had restrictions on whether one could look at
• 22:22
  them or not.
• 22:23
  But the Department of Economics records going up to about 1960,
• 22:26
  there weren't those sorts of restrictions.
• 22:30
  And there are other people's papers I've looked at, I won't mention particular
• 22:34
  names where there wasn't the same sort of care taken by, I guess, both the donor and
• 22:38
  then the archivists.
• 22:39
  And so there's a lot of stuff in there, letters of recommendation and so
• 22:44
  on, letters about tenure and so on,
• 22:46
  that are really pretty sensitive that one can look at, even make copies of.
• 22:51
  And so it's sort of hit or miss what one comes across in that regard.
• 22:55
  >> Jon Hartley: That's amazing, and I mean, to your credit, I'm sure,
• 23:00
  going through many, many archives and having to go to many different sources,
• 23:07
  it's not an easy thing to do, to say the least.
• 23:11
  So my hat is off to you in uncovering these factors.
• 23:16
  >> David Mitch: [CROSSTALK], If I can just mention one other thing, part of the issue
• 23:20
  one has to like being in archives, and that's kind of how I got into this line.
• 23:24
  And, in fact, sort of person that really got me interested in economic history was
• 23:29
  this faculty member there named Arcadius Gahan, and
• 23:32
  he had this member study, Carol Don and Regenstein,
• 23:35
  that would just sort of filled with all kinds of papers and documents.
• 23:38
  When I saw that, that looked like something I sort of wanted to do.
• 23:44
  So I enjoy spending time in archives, but the thing is,
• 23:47
  often one finds stuff in unexpected places.
• 23:49
  So in the course of working on this, I look, for example,
• 23:52
  at the office of the president's papers, and that's where a lot of this stuff,
• 23:56
  because there tends to be a paper trail up the chain of command.
• 23:59
  Through the administration, and that can often reveal stuff we would see if one
• 24:03
  just looked at the economics department as such.
• 24:06
  >> Jon Hartley: Well, that's fascinating, and this particular advisor of yours
• 24:10
  actually passed away just around the time that you were graduating.
• 24:13
  >> David Mitch: Right.
• 24:14
  >> Jon Hartley: It's unfortunate that life was cut short and amazing, just too,
• 24:19
  thinking about all these great economic historians like yourself
• 24:24
  that have gone through the University of Chicago.
• 24:28
  I know other departments like Stanford, for example, takes economic history along
• 24:33
  with Northwestern, takes economic history very seriously.
• 24:36
  And it's always great to hear from an economic historian.
• 24:41
  So I also wanna pivot here to economic growth and
• 24:45
  some of the work that you've done.
• 24:48
  You spent a lot of time, aside from the history of economic thought,
• 24:51
  I think you've spent even more time on thinking about economic growth.
• 24:56
  In particular, you have a theory about economic growth and
• 25:00
  the incentives for governments to promote economic growth and
• 25:04
  how they might be less well understood than people perhaps realize.
• 25:09
  Could you elaborate and explain a little bit more about your theory on growth and
• 25:13
  the government's incentive to promote it?
• 25:16
  >> David Mitch: Right, it is just a theory, so
• 25:18
  I'm not claiming this universally explosive explains everything.
• 25:22
  But in a way, the starting point, one of the things I've
• 25:26
  been doing over the last several few decades, actually, my teaching is,
• 25:31
  even though I don't do research in it, I teach a course in Asian economic history.
• 25:36
  And one of the phrases I came across, this was first for 19th century Japan, but
• 25:41
  actually goes back to ancient China.
• 25:44
  And one version of it is prosperous people, strong army.
• 25:51
  So the prosperous people, the prosperity part is sort of the economic
• 25:55
  growth component, and then the strong army is the other part.
• 25:58
  As with a lot of sort of Chinese Japanese phrases, there's no verb there.
• 26:03
  So you have these two noun clauses, rich people, strong army, and
• 26:07
  then there's sort of a connection between the two.
• 26:11
  But in Japan, when I first encountered this, this is the 19th century,
• 26:14
  the connection was Japan wanted to bring up its prosperity so
• 26:17
  it could develop a stronger military.
• 26:19
  This is after it had been invaded by the Admiral Perry's gunboats and so on.
• 26:25
  And so they realized their technological inferiority and wanted to catch up, and
• 26:28
  they realized to do that, they would have to promote economic growth.
• 26:32
  But as I started tracing this back, and it goes back,
• 26:37
  really to ancient China, 3400 bc, where this phrase originally goes.
• 26:44
  And it's sort of ambiguous what the direction of causation is,
• 26:49
  but as you get into it, one can see that this is a common motive
• 26:54
  in a variety of places and time periods.
• 26:57
  This perception by rulers that by developing economic growth,
• 27:01
  that's the best way to provide resources for developing their military,
• 27:05
  even more so than just sort of taxation systems and so on.
• 27:11
  And one can find this theme, for example, in early modern Europe.
• 27:15
  And this was something, actually, Jacob Viner wrote a very good article,
• 27:20
  and the two nouns he puts together are power in plenty.
• 27:25
  And actually, you find this phrase in Adam Smith,
• 27:28
  there's been an interesting issue about how you interpret this.
• 27:31
  But Smith, by the way, even though people think of him as a free trader and
• 27:36
  opposed to government interventions.
• 27:38
  There are passages where he advocates and can see there are reasons for
• 27:42
  things like the navigation acts.
• 27:45
  And there's a passage in the same chapter where he talks about the invisible hand
• 27:49
  promoting economic growth.
• 27:50
  Where he says, well, maybe there should be navigation acts because it can help
• 27:54
  promote the defense, help promote the Navy, provide resources for the Navy.
• 27:58
  And then he says, because defense is more important
• 28:01
  than opulence maybe the navigation acts aren't a bad thing.
• 28:05
  But I've seen interpretations that he may be sarcastic, but
• 28:09
  he does acknowledge the importance of basically strong defense for
• 28:14
  ultimately the prosperity of the country as laying the foundation for that.
• 28:20
  >> Jon Hartley: Well, it's interesting because Adam Smith, he wrote a lot in many
• 28:25
  respects, against mercantilism, which it was very much about,
• 28:30
  promoting militaristic objectives through sort of economic means.
• 28:36
  And their approach is very different, involving hoarding gold and
• 28:41
  things of this nature and avoiding trade and so forth with particular nations.
• 28:47
  But I guess maybe Smith's point was that actually,
• 28:51
  if your true goal is to promote militaristic objectives.
• 28:54
  Then following sort of a somewhat free market economy to
• 29:00
  some degree can actually help promote those objectives a bit better.
• 29:08
  That's a super interesting theory, and it's also interesting to think about just
• 29:14
  other sort of theories of growth that had been talked a lot about in recent years.
• 29:20
  I think in particular about narratives around the government's
• 29:25
  role in promoting technology and technological growth.
• 29:30
  I think in sort of the more popular economics press,
• 29:34
  you think about Mariana Mazzucato's work like the entrepreneurial state,
• 29:40
  the value of everything.
• 29:42
  We see this argument that things like, for example,
• 29:47
  the Internet and GPS came about through DARPA.
• 29:53
  It's a very stark contrast from, I think,
• 29:55
  the opening of Milton Friedman's capitalism and freedom in 1962.
• 29:59
  Where he sort of dismisses all the things that government has done and
• 30:04
  says, well, who came up with the assembly line.
• 30:07
  Henry Ford, and gives a lot of other free market examples about how sort of private
• 30:12
  industry has really been responsible for so much technological development.
• 30:17
  Now, what you're saying is really more about government incentives,
• 30:21
  not about how growth comes about per se.
• 30:25
  But it's interesting to think about not
• 30:29
  only why governments may want growth.
• 30:34
  But to what degree they can promote technological development
• 30:39
  on top of sort of growth through the means of spending, lower taxes and so forth.
• 30:47
  I guess the sort of more Keynesian route.
• 30:51
  But this is all fascinating on all fronts.
• 30:55
  And every time I talk with you, I learned so
• 30:58
  many historical facts that I had no idea about.
• 31:01
  And really fascinating to learn how Milton Friedman was almost
• 31:04
  not hired by the University of Chicago's Economics Department instead.
• 31:09
  Maybe John Hicks or Paul Samuelson could have joined the department instead.
• 31:15
  And could one imagine how different of a character
• 31:19
  the Department of Economics theory of Chicago taken on and
• 31:24
  perhaps the Chicago school as people perceive it and thought about it.
• 31:30
  Really since,
• 31:31
  I think the 19 before that would have been totally different had Milton Friedman
• 31:37
  not ended up being that compromised candidate that everyone went with.
• 31:42
  And fascinating to talk about economic growth as well.
• 31:45
  I think always and for quite a while has been sort of the number one issue in
• 31:50
  economics is just trying to explain economic growth and understand it.
• 31:55
  Well, thanks so much, David, for coming on.
• 31:57
  It's been a real pleasure.
• 31:59
  >> David Mitch: No, thank you for the invitation.
• 32:00
  I've enjoyed it very much.
• 32:03
  >> Jon Hartley: Our guest today was David Mitch, an economic historian and
• 32:07
  professor at the University of Maryland, Baltimore county.
• 32:10
  You've been listening to the capitalism and freedom in the 21st century podcast
• 32:15
  where we talk about economics, markets and public policy.
• 32:18
  I'm John Hartley, your host.
• 32:20
  Thanks so much for joining us.
• 32:21
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