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If you like Milton Friedman's story, you might also like:
Gary Becker,
George H.W. Bush,
Paul H. Nitze,
John Sexton
and Lech Walesa

Milton Friedman's recommended reading: The Scarlet Plague

Related Links:
Nobel Prize
Hoover Institution
Friedman Foundation

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Milton Friedman
Milton Friedman
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Milton Friedman Interview (page: 2 / 7)

Nobel Prize in Economics

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  Milton Friedman

Perhaps there's a connection between the two stories you just told. A skepticism for wisdom that is handed down and presented to you, and the notion that truth is beauty. Is that the same skepticism you have applied to various governmental policies and approaches over the years?

Milton Friedman: Yes and no. I have not applied skepticism to those policies. I hope and I believe that I have tried to examine what their actual effects have been as opposed to what their intentions were. I think the great problem in so many of these areas is to distinguish between rhetoric and substance. There is a famous saying, "The road to hell is paved with good intentions." And that is the case.

Almost all government programs are started with good intentions, but when you look at what they actually achieve, there is a general rule. Almost every such program has results that are the opposite of the intentions of the well-meaning people who originally backed it. I say "well-meaning," because in every such case, there are people who are doing it because they believe it would be good for the country. Unless you have some people like that, it is hard to get anything through. On the other hand, it's also hard to get through, unless there is an accord of people, who can see how they personally can benefit from having that policy put into effect. And in some cases, the results -- not in all -- but in some cases, the results do coincide with their expectations. But, they are almost always the opposite of the intentions of the well-meaning people.

Now, I don't believe that's a general skepticism about everything. I think that's the old American saying, "I'm from Missouri. Show me." I don't want to go ahead on promises. You want to look at what actually happened. So I believe that the attitude has been a combination of the real training that I got in the field of economics, and the attitude towards economics as a concern with real problems, and as a machine with which to examine them. The real effects of real policies, and the desire to see what actually happened, as opposed to what people say will happen.

You mentioned a teacher who inspired you. Are there other people that you remember from your youth who had a comparable influence?

Milton Friedman Interview Photo
Milton Friedman: There was this one man I mentioned who taught plane geometry, and there were a number of other high school teachers. One who taught Latin, as a matter of fact, which I never became very expert in, but I did take it. He happened to be a very young man, only just recently graduated from college, and who for that reason was closer to the high school students under him. Somehow or other, I think he had a real influence on me, encouraging me to go ahead, try to go on to college, to become more educated and more trained. Those are about the only people that I can really think of before I went on to college. Once I went on to college, there were some other people who had some great and very real influence on me.

Who sticks out in your mind during that period?

Milton Friedman: Oh, there is no doubt about that. During my undergraduate college, there are two people who unquestionably had a major influence on me. One of them was Arthur Burns, who later on became a very important influence on the political area. He was Chairman of the Council of Economic Advisors under President Eisenhower; he was a close advisor of President Nixon. President Nixon appointed him Chairman of the Federal Reserve Board, and President Ford reappointed him. Subsequently, under President Reagan, he was Ambassador to Germany. My association with him was long before those times. He was a relatively young man when I was an undergraduate. In fact, he was just in the process of trying to complete his doctoral dissertation at Columbia. One of the most valuable courses I ever took in my life was a course I had with Arthur. I call him Arthur, because he later became a very close personal friend of mine. We were friends for all of his life; he died a few years ago. I gave a little talk at a memorial ceremony for Arthur after his death.

Outside of my parents and my wife, there is nobody else who had as much influence on my life as Arthur Burns did. And as I say, that major source of influence started exerting itself during a course I took in which there were only two students and he. And this course consisted -- I don't know what it was supposed to be -- but it consisted in going over the draft of his doctoral dissertation sentence by sentence, and trying to find mistakes in it, and analyze it and improve it and criticize it. And as I say, I can think of but one other course in my life that had as much value to me as that course. Because it supplied standards of workmanship, the level of accuracy you want to aim at, the openness to criticism. Those are the kinds of things it provided.

[ Key to Success ] Preparation

Arthur was a great scholar. He only stayed at Rutgers for a few years, and then he became a professor at Columbia University. From Columbia University he was associated with a research organization called the National Bureau of Economic Research; he worked there with Wesley Mitchell. Wesley Mitchell was a very famous economist at the time, and he was head of the National Bureau before Arthur was. You read in the papers today about the leading indicators. Those leading indicators derived from the work of Arthur Burns and Wesley Mitchell at the National Bureau of Economic Research during the 1930s. Henry Morgenthau, when he was Secretary of the Treasury, asked Mitchell if he would develop some way of trying to forecast what was going to happen to the economy that they could use at the Treasury. And he and Arthur, mostly Arthur, produced this set of leading indicators. They produced the original set, which is the great-grandfather of the present set. So, Arthur certainly had an enormous influence.

The other person who had an enormous influence on me was the man who really was responsible for me going to Chicago, Homer Jones. He was a graduate student at Chicago who had taken a job as an instructor at Rutgers, because he needed the money. He had been working there for a couple of years. He was a relatively young man, but he had a very real influence on me because of his understanding of economic analysis, and also because of his qualities as a teacher and a human being. He was a great human being. Homer subsequently went to Washington to work with the Federal Deposit Insurance Corporation, and then he became the vice president of the Federal Reserve Bank of St. Louis. He really achieved a great deal of importance in the area of central banking and monetary policies. Homer had been a student of Frank H. Knight at the University of Chicago. Through Knight, he persuaded Chicago to offer me a tuition scholarship, and that's how I happened to go to the University of Chicago. So those two people, unquestionably, had the greatest influence. There are other professors, other teachers who had an influence on me, but those two stand out.

A lot of people have brains, and potential, and work hard. Not everyone is as successful as you have been. How do you account for your success?

Milton Friedman: Luck. Chance. People grossly underestimate the role of luck and chance in people's lives. Let me illustrate it. If the United States, in the 1880's and 1890's, had had the kind of laws it has now, my parents would never have been able to come to the United States. They would not have gotten visas; they would not have gotten in there. If they had met and gotten married where they came from an area, when they had left it was Hungary, Austria-Hungary. It was Carpatho-Ruthenia. Later it was at the tail eastern end of Czechoslovakia and is currently (1991) a province of Russia. If they had been unable to come to the United States, if they had stayed there and gotten married there, and I was born and all that, I'd now be a citizen of Russia. Pure chance. I had nothing to do with it. One point after another, pure chance. If Homer Jones hadn't happened to be teaching at Rutgers at the time I went there, I never would have had the opportunity to go to Chicago. I would certainly not have become an economist. I would probably have become an applied mathematician. I don't know what I would have done in that area. And so it goes. Pure chance plays an enormous role in the lives of all of us. I don't mean to say that everything is due to chance. Certainly it is not, certainly character matters. Certainly, whether people are willing to work hard. Certainly pure IQ matters. And that's a matter of chance, too. Pure random chance, which half of which parent's genes you happen to get. Character, intelligence and so on matter, but I think accident matters an enormous amount. Whether people happen to be at the right place at the right time.

But when all these fortunate things happened to you, later on in your life, you were prepared. You had spent enormous time and work preparing yourself to take advantage of whatever lucky breaks you had.

Milton Friedman: I think the most important single thing in people's success is whether they are lucky enough to be able to earn their living at doing something that, if they could afford to, they would do without any pay. I think the most unlucky people in the world are those who have to earn their living by doing something in which they would not voluntarily work overtime.

[ Key to Success ] Passion

Things that are a drudgery for them?

Milton Friedman: Right. Things that they dislike. Millions of people have to do that, they are the most unlucky people. The luckiest people are people like myself, who, by accident, are able to earn their living by doing something that if they could afford to, they would do without getting paid. If you don't really want to work overtime at a job, you shouldn't have that job.

Would that be your advice to young people or others, trying to start a business? Does that work in our profit system?

Milton Friedman: I'd like to make a very different point. I want to introduce a little bit of realism. You must realize that what we have is not a profit system; it's a profit and loss system. The loss part is just as important as the profit part. What distinguishes the private system from a government socialist system is the loss part. If an entrepreneur's project doesn't work, he closes it down. If it had been a government project, it would have been expanded, because there is not the discipline of the profit and loss element. If you have a really good idea, it may work. But remember, you're gambling. That's what makes it exciting, and that's what makes it important. What rules out the mistakes is the possibility of making a loss.

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