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118-551: The first EconTalk podcast was released in March 2006. Roberts interviewed Milton Friedman on EconTalk just a few months before Friedman's death in November 2006. When Roberts was asked in 2015 to pick his most interesting episode, he mentioned two podcasts and included the Friedman interview he had conducted almost a decade earlier. EconTalk was awarded second place in 2006 and 2007 in

236-520: A centrally planned economy . In an EconTalk interview released on March 9, 2009, the co-founder of Misplaced Pages , Jimmy Wales , said that he read "The Use of Knowledge in Society" as an undergraduate and that it had a "deep impact" on his thinking. Later, his decision to structure the Misplaced Pages project as a collaborative encyclopedia that anyone could edit reflected the essay's point that decentralized knowledge

354-523: A fixed cost which must be incurred regardless of any outside factors such as work experience , or other factors of human capital . During 1940, Friedman was appointed as an assistant professor teaching economics at the University of Wisconsin–Madison , but encountered anti semitism in the Economics department and returned to government service. From 1941 to 1943 Friedman worked on wartime tax policy for

472-533: A gift economy before the innovation of modern-day currency. Peter Watson dates the history of long-distance commerce to c.  150,000 years ago. In the Mediterranean region, the earliest contact between cultures involved members of the species Homo sapiens , principally using the Danube river, at a time beginning 35,000–30,000 BP . There is evidence of the exchange of obsidian and flint during

590-653: A natural rate of unemployment and argued that unemployment below this rate would cause inflation to accelerate. He argued that the Phillips curve was in the long run vertical at the "natural rate" and predicted what would come to be known as stagflation . Friedman promoted a macroeconomic viewpoint known as monetarism and argued that a steady, small expansion of the money supply was the preferred policy, as compared to rapid, and unexpected changes. His ideas concerning monetary policy , taxation, privatization , and deregulation influenced government policies, especially during

708-522: A 2007 article in Commentary magazine, his "parents were moderately observant Jews, but Friedman, after an intense burst of childhood piety , rejected religion altogether". He described himself as an agnostic. Friedman wrote extensively of his life and experiences, especially in 1998 in his memoirs with his wife, Rose , titled Two Lucky People . In this book, Rose Friedman describes how she and Milton Friedman raised their two children, Janet and David, with

826-464: A Christmas tree in the home. "Orthodox Jews of course, do not celebrate Christmas. However, just as, when I was a child, my mother had permitted me to have a Christmas tree one year when my friend had one, she not only tolerated our having a Christmas tree, she even strung popcorn to hang on it." Friedman died of heart failure at the age of 94 years in San Francisco on November 16, 2006. He was still

944-535: A decline in the quantity of money by one-third from 1929 to 1933 ... Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government. This theory was put forth in A Monetary History of the United States , and the chapter on the Great Depression was then published as a stand-alone book entitled The Great Contraction, 1929–1933 . Both books are still in print from

1062-433: A few circumstances tariffs might be beneficial to the host country; but never for the world at large. The Great Depression was a major economic recession that ran from 1929 to the late 1930s. During this period, there was a great drop in trade and other economic indicators. The lack of free trade was considered by many as a principal cause of the depression causing stagnation and inflation. Only during World War II did

1180-525: A mess, highlighting the strained relationship between monetarism and new classical schools. Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work. This work contended that utility-maximizing consumers would spend a proportional amount of what they perceived to be their permanent income. Permanent Income refers to such factors like human capital . Windfall gains would mostly be saved because of

1298-615: A near-collapse of the trade network in the western world. Trade, however, continued to flourish among the kingdoms of Africa, the Middle East, India, China, and Southeast Asia. Some trade did occur in the west. For instance, Radhanites were a medieval guild or group (the precise meaning of the word is lost to history) of Jewish merchants who traded between the Christians in Europe and the Muslims of

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1416-458: A positive relationship between how well-connected a coastal location was and the local prevalence of archaeological sites from the Iron Age. This suggests that a location's trade potential was an important determinant of human settlements. The complaint tablet to Ea-nāṣir , dated 1750 BCE, documents the tribulations of a copper merchant at the time. From the beginning of Greek civilization until

1534-597: A recurring role in the podcasts, particularly in how it contributes to the creation of wealth . These increases in productivity are notably striking and often appear in conversations concerning trade , growth , and technology . A surprisingly large number of podcast episodes are dedicated in their entirety to Smith's lesser-known book first published in 1759, The Theory of Moral Sentiments . After Roberts released his own book examining The Theory of Moral Sentiments entitled How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness , he dedicated

1652-517: A resulting decrease in real estate demand for commercial and residential parking areas). Invited guests sometimes include controversial authors or areas of discussion in economics and other fields where there is current disagreement. Authors on opposing sides of an issue are invited to present their perspectives and are challenged with ideas on the opposing side by Roberts, who often presents arguments from earlier guests. A few guests appear regularly on EconTalk to consider questions that arise in

1770-409: A theory which would later become part of mainstream economics and he was among the first to propagate the theory of consumption smoothing . During the 1960s, he became the main advocate opposing Keynesian government policies, and described his approach (along with mainstream economics) as using "Keynesian language and apparatus" yet rejecting its initial conclusions. He theorized that there existed

1888-514: A working economist performing original economic research; his last column was published in The Wall Street Journal the day after his death. He was survived by his wife, Rose Friedman (who would die on August 18, 2009), and their two children, David D. Friedman , known for The Machinery of Freedom , as well as his unique anarcho-capitalism from a Chicago School perspective, and attorney and bridge player Jan Martel . Friedman

2006-516: Is sequential sampling . Friedman did statistical work at the Division of War Research at Columbia, where he and his colleagues came up with the technique. It became, in the words of The New Palgrave Dictionary of Economics , "the standard analysis of quality control inspection". The dictionary adds, "Like many of Friedman's contributions, in retrospect it seems remarkably simple and obvious to apply basic economic ideas to quality control; that, however,

2124-400: Is a measure of his genius." Trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market . Traders generally negotiate through a medium of credit or exchange, such as money. Though some economists characterize barter (i.e. trading things without

2242-607: Is always and everywhere a monetary phenomenon. Friedman rejected the use of fiscal policy as a tool of demand management; he also held the belief that the government's role in the guidance of the economy should be restricted severely. Friedman wrote extensively on the Great Depression , and he termed the 1929–1933 period the Great Contraction . He argued that the Depression had been caused by an ordinary financial shock and

2360-412: Is called multilateral trade . In one modern view, trade exists due to specialization and the division of labor , a predominant form of economic activity in which individuals and groups concentrate on a small aspect of production, but use their output in trade for other products and needs. Trade exists between regions because different regions may have a comparative advantage (perceived or real) in

2478-564: Is deeply bound up in trade, as a system of clay tokens used for accounting – found in Upper Euphrates valley in Syria dated to the 10th millennium BCE – is one of the earliest versions of writing. Ebla was a prominent trading center during the third millennia BCE, with a network reaching into Anatolia and north Mesopotamia. Materials used for creating jewelry were traded with Egypt since 3000 BCE. Long-range trade routes first appeared in

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2596-457: Is how we should set out to describe this critical idea, as normal conversation rarely captures the essence of the idea. Roberts has commended the 1945 essay written by Hayek, " The Use of Knowledge in Society ", as have a number of his guests. The essay explains that a free market with an uninhibited price mechanism at its core will make much more efficient use of information that is broadly dispersed among numerous members of society than will

2714-516: Is often superior to centralized, processed information. In essence, Wales decided that it was "better to push the decision making out to the endpoints - out to the people who actually have the information [rather than trying to] gather all of the world's information and have it sent in to a group of experts who then make editorial decisions." Concepts from Adam Smith 's essential 1776 book The Wealth of Nations are mentioned frequently by Roberts and many of his guests. Smith's division of labor plays

2832-721: The Bengal Sultanate was a major trading nation in the world and often referred to by Europeans as the wealthiest country with which to trade. In the 16th and 17th centuries, the Portuguese gained an economic advantage in the Kingdom of Kongo due to different philosophies of trade. Whereas Portuguese traders concentrated on the accumulation of capital, in Kongo spiritual meaning was attached to many objects of trade. According to economic historian Toby Green , in Kongo "giving more than receiving

2950-693: The Federal Reserve and Freddie Mac , and Richard Epstein , a lawyer who has written extensively in the field of law and economics . Simeon Djankov , the founder of the Doing Business report , also spoke on the podcast. Though Roberts is markedly frank about his own libertarian biases, EconTalk has been noted for hosting civil, cogent discussions between Roberts and others with whom he vigorously disagrees. Roberts also hosts non-economists such as Patrick Collison , Sam Altman , Marc Andreessen and Nassim Nicholas Taleb . EconTalk has an impact beyond

3068-615: The Friedman Foundation for Educational Choice , later renamed EdChoice . Friedman's works cover a broad range of economic topics and public policy issues. His books and essays have had global influence, including in former communist states . A 2011 survey of economists commissioned by the EJW ranked Friedman as the second-most popular economist of the 20th century, following only John Maynard Keynes . Upon his death, The Economist described him as "the most influential economist of

3186-505: The Hoover Institution at Stanford University . During 1977, Friedman was approached by Bob Chitester and the Free to Choose Network . They asked him to create a television program presenting his economic and social philosophy. Friedman and his wife Rose worked on this project for the next three years, and during 1980, the ten-part series, titled Free to Choose , was broadcast by

3304-610: The National Recovery Administration and the Agricultural Adjustment Administration ". Foreshadowing his later ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued. Indeed, Friedman later concluded that all government intervention associated with the New Deal was "the wrong cure for the wrong disease" , arguing

3422-512: The Philips curve evolved from a strict model emphasizing the connection between inflation and unemployment as being absolute, to a model which emphasized short term unemployment reductions and long term employment stagnations. Friedman's revised and updated Phillips Curve also changed as a result of Robert Lucas's idea of Rational expectations , replacing the adaptive expectations Friedman used. One of his most famous contributions to statistics

3540-597: The Princeton University Press , and some editions include as an appendix a speech at a University of Chicago event honoring Friedman in which Ben Bernanke made this statement: Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression, you're right. We did it. We're very sorry. But thanks to you, we won't do it again. Friedman also argued for

3658-633: The Public Broadcasting Service (PBS). The companion book to the series (co-authored by Milton and his wife, Rose Friedman ), also titled Free To Choose , was the bestselling nonfiction book of 1980. Friedman served as an unofficial adviser to Ronald Reagan during his 1980 presidential campaign , and then served on the President's Economic Policy Advisory Board for the rest of the Reagan Administration . Ebenstein says Friedman

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3776-714: The Stone Age . Trade in obsidian is believed to have taken place in New Guinea from 17,000 BCE. The earliest use of obsidian in the Near East dates to the Lower and Middle paleolithic. Robert Carr Bosanquet investigated trade in the Stone Age by excavations in 1901. The first clear archaeological evidence of trade in manufactured goods is found in south west Asia. Archaeological evidence of obsidian use provides data on how this material

3894-482: The University of Minnesota (where his friend George Stigler was employed). On February 12, 1945, his only son, David D. Friedman , who would later follow in his father's footsteps as an economist, was born. In 1946, Friedman accepted an offer to teach economic theory at the University of Chicago (a position opened by the departure of his former professor Jacob Viner to Princeton University ). Friedman would work for

4012-623: The Venetian Republic and the Republic of Genoa were major trade centers. They dominated trade in the Mediterranean and the Black Sea, having the monopoly between Europe and the Near East for centuries. From the 8th to the 11th century, the Vikings and Varangians traded as they sailed from and to Scandinavia. Vikings sailed to Western Europe, while Varangians to Kyivan Rus' . The Hanseatic League

4130-517: The Weblog Awards , followed by 1st place in 2008. By 2016, Roberts had recorded over 500 podcast episodes, and each week's new installment was downloaded by approximately 80,000 listeners. Roberts has described himself as "a pretty hardcore free marketer ." In keeping with this general ideological orientation, major themes of the podcast series include Austrian economics (especially the theories of F.A. Hayek ), Classical economics (in particular

4248-463: The economics of education and of sports. Because the podcast series unabashedly favors a laissez-faire approach to economic regulation , some center-left news organizations view it with a certain wariness. However, the series' reputation for thoughtful analysis also creates genuine interest: a 2010 editorial in the left-leaning British newspaper The Guardian warned that EconTalk is "far too trusting of free markets," but concluded by saying, "at

4366-684: The federal government , as an advisor to senior officials of the United States Department of the Treasury . As a Treasury spokesman during 1942, he advocated a Keynesian policy of taxation. He helped to invent the payroll withholding tax system, since the federal government needed money to fund the war. He later said, "I have no apologies for it, but I really wish we hadn't found it necessary and I wish there were some way of abolishing withholding now." In Milton and Rose Friedman's jointly written memoir, he wrote, "Rose has repeatedly chided me over

4484-568: The law of diminishing marginal utility . Friedman's essay " The Methodology of Positive Economics " (1953) provided the epistemological pattern for his own subsequent research and to a degree that of the Chicago School. There he argued that economics as science should be free of value judgments for it to be objective. Moreover, a useful economic theory should be judged not by its descriptive realism but by its simplicity and fruitfulness as an engine of prediction. That is, students should measure

4602-490: The market (which consists both of individuals and other companies) at the lowest production cost . A system of international trade has helped to develop the world economy but, in combination with bilateral or multilateral agreements to lower tariffs or to achieve free trade , has sometimes harmed third-world markets for local products. Free trade is a policy by which a government does not discriminate against imports or exports by applying tariffs or subsidies. This policy

4720-527: The permanent income hypothesis . Friedman began employment with the National Bureau of Economic Research during the autumn of 1937 to assist Simon Kuznets in his work on professional income. This work resulted in their jointly authored publication Incomes from Independent Professional Practice , which introduced the concepts of permanent and transitory income, a major component of the permanent income hypothesis that Friedman worked out in greater detail in

4838-405: The terms of trade through maintaining tariffs , and that the response to this might be reciprocity in trade policy. Ricardo and others had suggested this earlier. This was taken as evidence against the universal doctrine of free trade, as it was believed that more of the economic surplus of trade would accrue to a country following reciprocal , rather than completely free, trade policies. This

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4956-553: The 1950s. The book hypothesizes that professional licensing artificially restricts the supply of services and raises prices. Incomes from Independent Professional Practice remained quite controversial within the economics community because of Friedman's hypothesis that barriers to entry , which were exercised and enforced by the American Medical Association , led to higher than average wages for physicians, compared to other professional groups. Barriers to entry are

5074-628: The 1954–1955 academic year as a Fulbright Visiting Fellow at Gonville and Caius College, Cambridge . At the time, the Cambridge economics faculty was divided into a Keynesian majority (including Joan Robinson and Richard Kahn ) and an anti-Keynesian minority (headed by Dennis Robertson ). Friedman speculated he was invited to the fellowship because his views were unacceptable to both of the Cambridge factions. Later his weekly columns for Newsweek magazine (1966–84) were well read and increasingly influential among political and business people, and helped earn

5192-424: The 1980s. His monetary theory influenced the Federal Reserve 's monetary policy in response to the 2007–2008 financial crisis . After retiring from the University of Chicago in 1977, and becoming Emeritus professor in economics in 1983, Friedman served as an advisor to Republican U.S. president Ronald Reagan and Conservative British prime minister Margaret Thatcher . His political philosophy extolled

5310-686: The 3rd millennium BCE, when Sumerians in Mesopotamia traded with the Harappan civilization of the Indus Valley . The Phoenicians were noted sea traders, traveling across the Mediterranean Sea , and as far north as Britain for sources of tin to manufacture bronze . For this purpose they established trade colonies the Greeks called emporia . Along the coast of the Mediterranean, researchers have found

5428-791: The Atlantic and the Pacific Oceans. In 1776, Adam Smith published the paper An Inquiry into the Nature and Causes of the Wealth of Nations . It criticized Mercantilism , and argued that economic specialization could benefit nations just as much as firms. Since the division of labour was restricted by the size of the market, he said that countries having access to larger markets would be able to divide labour more efficiently and thereby become more productive . Smith said that he considered all rationalizations of import and export controls "dupery", which hurt

5546-496: The Bureau's staff. He accepted the invitation, and assumed responsibility for the Bureau's inquiry into the role of money in the business cycle . As a result, he initiated the "Workshop in Money and Banking" (the "Chicago Workshop"), which promoted a revival of monetary studies. During the latter half of the 1940s, Friedman began a collaboration with Anna Schwartz , an economic historian at

5664-574: The Bureau, that would ultimately result in the 1963 publication of a book co-authored by Friedman and Schwartz, A Monetary History of the United States, 1867–1960 . In 1951, Friedman was awarded the John Bates Clark Medal , which at the time was awarded every other year to the best economist under the age of 40, by the American Economic Association . Remarkably, his most influential work was still ahead of him. Friedman spent

5782-549: The Caribbean. During the Middle Ages , commerce developed in Europe by trading luxury goods at trade fairs. Wealth became converted into movable wealth or capital . Banking systems developed where money on account was transferred across national boundaries. Hand to hand markets became a feature of town life and were regulated by town authorities. Western Europe established a complex and expansive trade network with cargo ships being

5900-612: The Consumption Function helped Friedman gain respect in the field of economics. His work on the permanent income hypothesis is among the many contributions which were listed as reasons for his Sveriges-Riksbank Prize in Economic Sciences . His work was later expanded on by Christopher D. Carroll, especially in regards to the absence of liquidity constraints . The permanent income hypothesis faces some criticism, mainly from Keynesian economists. The primary criticism of

6018-440: The Federal Reserve was to blame, and that they should have expanded the money supply in reaction to what he later described in A Monetary History of the United States as " The Great Contraction ". Later, Friedman and his colleague Anna Schwartz wrote A Monetary History of the United States, 1867–1960 , which argued that the Great Depression was caused by a severe monetary contraction due to banking crises and poor policy on

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6136-537: The Mediterranean region. Trade in the Mediterranean during the Neolithic of Europe was greatest in this material. Networks were in existence at around 12,000 BCE Anatolia was the source primarily for trade with the Levant, Iran and Egypt according to Zarins study of 1990. Melos and Lipari sources produced among the most widespread trading in the Mediterranean region as known to archaeology. The Sari-i-Sang mine in

6254-710: The Near East. The first true maritime trade network in the Indian Ocean was by the Austronesian peoples of Island Southeast Asia . Initiated by the indigenous peoples of Taiwan and the Philippines , the Maritime Jade Road was an extensive trading network connecting multiple areas in Southeast and East Asia. Its primary products were made of jade mined from Taiwan by Taiwanese indigenous peoples and processed mostly in

6372-468: The October 13, 2014 episode of EconTalk to a conversation about his views on Smith's earlier book. Roberts sometimes asks his guests if they are optimistic about the future, particularly at the end of the interview. Guests occasionally speculate on what may evolve in the long run. Many of the discussions on EconTalk regarding future developments do not center specifically on new technologies , but rather on

6490-559: The Philippines by indigenous Filipinos, especially in Batanes , Luzon , and Palawan . Some were also processed in Vietnam , while the peoples of Malaysia , Brunei , Singapore , Thailand , Indonesia , and Cambodia also participated in the massive trading network. The maritime road is one of the most extensive sea-based trade networks of a single geological material in the prehistoric world. It

6608-432: The United States, 1867–1960 (1963), which was an examination of the role of the money supply and economic activity in the U.S. history. Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between inflation and the money supply, mainly that inflation could be avoided with proper regulation of the monetary base 's growth rate. He famously used

6726-522: The United States, the country where it is produced, and even beyond the countries which speak primarily English. Ideas from the podcast series are discussed in the United Kingdom, China, India, France, Australia and elsewhere; by think tanks , among international aid organizations and those interested in development economics . Milton Friedman Milton Friedman ( / ˈ f r iː d m ən / ; July 31, 1912 – November 16, 2006)

6844-457: The University of Chicago for the next 30 years. There, he contributed to the establishment of an intellectual community that produced a number of Nobel Memorial Prize winners, known collectively as the Chicago school of economics . At the time, Arthur F. Burns , who was then the head of the National Bureau of Economic Research , and later chairman of the Federal Reserve , asked Friedman to rejoin

6962-517: The University of Chicago." The relationship between Friedman and Lucas, or new classical macroeconomics as a whole, was highly complex. The Friedmanian Phillips curve was an interesting starting point for Lucas, but he soon realized that the solution provided by Friedman was not quite satisfactory. Lucas elaborated a new approach in which rational expectations were presumed instead of the Friedmanian adaptive expectations . Due to this reformulation,

7080-426: The accuracy of its predictions, rather than the 'soundness of its assumptions'. His argument was part of an ongoing debate among such statisticians as Jerzy Neyman , Leonard Savage , and Ronald Fisher . While being an advocate of the free market, Friedman believed that the government had two crucial roles. In an interview with Phil Donahue, Friedman argued that "the two basic functions of a government are to protect

7198-471: The agreement. In 1947, 23 countries agreed to the General Agreement on Tariffs and Trade to promote free trade. The European Union became the world's largest exporter of manufactured goods and services, the biggest export market for around 80 countries. Today, trade is merely a subset within a complex system of companies which try to maximize their profits by offering products and services to

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7316-404: The analogy of " dropping money out of a helicopter ", to avoid dealing with money injection mechanisms and other factors that would overcomplicate his models. Friedman's arguments were designed to counter the popular concept of cost-push inflation , that the increased general price level at the time was the result of increases in the price of oil, or increases in wages; as he wrote: Inflation

7434-416: The chapters specifying an issue in each respective chapter from the role of government and money supply to social welfare programs to a special chapter on occupational licensure. Friedman concludes Capitalism and Freedom with his "classical liberal" stance that government should stay out of matters that do not need it and should only involve itself when absolutely necessary for the survival of its people and

7552-480: The country. He recounts how the best of a country's abilities come from its free markets while its failures come from government intervention. In 1977, at the age of 65, Friedman retired from the University of Chicago after teaching there for 30 years. He and his wife moved to San Francisco, where he became a visiting scholar at the Federal Reserve Bank of San Francisco . From 1977 on, he was affiliated with

7670-505: The depth of economic thinking. Friedman was unable to find academic employment, so in 1935 he followed his friend W. Allen Wallis to Washington, D.C., where Franklin D. Roosevelt 's New Deal was "a lifesaver" for many young economists. At this stage, Friedman said he and his wife "regarded the job-creation programs such as the WPA , CCC , and PWA appropriate responses to the critical situation", but not "the price- and wage-fixing measures of

7788-525: The desire to compete with Milton professionally (perhaps because I was smart enough to recognize I couldn't). On the other hand, he has always made me feel that his achievement is my achievement." During the 1960s, Friedman built (and subsequently maintained) a cottage in Fairlee , Vermont. Friedman also had an apartment in Russian Hill , San Francisco, where he lived from 1977 until his death. According to

7906-623: The development of a global, international economy. Retail trade consists of the sale of goods or merchandise from a very fixed location (such as a department store , boutique , or kiosk ), online or by mail , in small or individual lots for direct consumption or use by the purchaser. Wholesale trade is the traffic in goods that are sold as merchandise to retailers , industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services. Historically, openness to free trade substantially increased in some areas from 1815 until

8024-410: The doctrine still considered the most counterintuitive in economics : The ascendancy of free trade was primarily based on national advantage in the mid 19th century. That is, the calculation made was whether it was in any particular country's self-interest to open its borders to imports. John Stuart Mill proved that a country with monopoly pricing power on the international market could manipulate

8142-421: The duration and seriousness of which were greatly increased by the subsequent contraction of the money supply caused by the misguided policies of the directors of the Federal Reserve. The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over

8260-522: The east–west trade route known as the Silk Road after the 4th century CE up to the 8th century CE, with Suyab and Talas ranking among their main centers in the north. They were the main caravan merchants of Central Asia. From the Middle Ages, the maritime republics , in particular Venice , Pisa and Genoa , played a key role in trade along the Mediterranean. From the 11th to the late 15th centuries,

8378-493: The economic implications of new technologies . The podcast's conversations regarding driverless cars , for example, analyzed how autonomous cars might decrease employment of truck drivers , the potential for increased labor productivity as workers complete job tasks while being chauffeured to their workplaces, the possibility that driverless cars might be supplied through the sharing economy , and how carsharing of driverless cars could decrease individual car ownership (with

8496-500: The end of an hour, the dismal science doesn't seem so bad after all, but a fun and useful set of tools to approach some of society's biggest questions." Roberts has a particular interest in spontaneous order and related theories from Friedrich August von Hayek which emphasize the role and nature of knowledge. This often finds form in how societies organize themselves in not just economic but in social and political spheres as well. A running question Roberts poses to guests in this vein

8614-598: The faculty at the University of Chicago that rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics heavily based on the concept of rational expectations . Several students, young professors and academics who were recruited or mentored by Friedman at Chicago went on to become leading economists, including Gary Becker , Robert Fogel , and Robert Lucas Jr. Friedman's challenges to what he called "naive Keynesian theory" began with his interpretation of consumption , which tracks how consumers spend. He introduced

8732-592: The fall of the Roman Empire in the 5th century, a financially lucrative trade brought valuable spice to Europe from the far east, including India and China. Roman commerce allowed its empire to flourish and endure. The latter Roman Republic and the Pax Romana of the Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy , as Rome had become

8850-408: The first eighteen years and more than half a million since 1962. Capitalism and Freedom was translated into eighteen languages. Friedman talks about the need to move to a classically liberal society, that free markets would help nations and individuals in the long-run and fix the efficiency problems currently faced by the United States and other major countries of the 1950s and 1960s. He goes through

8968-535: The first millennium AD. It continued up to historic times, later becoming the Maritime Silk Road. The emergence of exchange networks in the Pre-Columbian societies of and near to Mexico are known to have occurred within recent years before and after 1500 BCE. Trade networks reached north to Oasisamerica . There is evidence of established maritime trade with the cultures of northwestern South America and

9086-643: The highest they have ever been. Trade is from Middle English trade ("path, course of conduct"), introduced into English by Hanseatic merchants, from Middle Low German trade ("track, course"), from Old Saxon trada ("spoor, track"), from Proto-Germanic *tradō ("track, way"), and cognate with Old English tredan ("to tread"). Commerce is derived from the Latin commercium , from cum "together" and merx , "merchandise." Trade originated from human communication in prehistoric times. Prehistoric peoples exchanged goods and services with each other in

9204-429: The hypothesis is based on a lack of liquidity constraints . His book Capitalism and Freedom , inspired by a series of lectures he gave at Wabash College , brought him national and international attention outside academia. It was published in 1962 by the University of Chicago Press and consists of essays that used non-mathematical economic models to explore issues of public policy. It sold over 400,000 copies in

9322-495: The ideas of Adam Smith ), the way markets evolve, spontaneous order (which is often referred to as "emergence" or "emergent order"), and the division of labor . Guests often include authors of recently published books of current interest in economics. Topics of interest to guests as well as topics suggested by commenters and listeners sometimes become extended themes in subsequent podcasts. Additional themes include health economics , law and economics , public choice , as well as

9440-441: The insight that a government that brings about greater inflation cannot permanently reduce unemployment by doing so. Unemployment may be temporarily lower, if the inflation is a surprise, but in the long run unemployment will be determined by the frictions and imperfections of the labor market. If the conditions are not met and inflation is expected, the "long run" effects will replace the "short term" effects. Through his critique,

9558-489: The magazine a Gerald Loeb Special Award in 1968. From 1968 to 1978, he and Paul Samuelson participated in the Economics Cassette Series, a biweekly subscription series where the economist would discuss the days' issues for about a half-hour at a time. One of Milton Friedman's most popular works, A Theory of the Consumption Function , challenged traditional Keynesian viewpoints about the household. This work

9676-406: The main carrier of goods; Cogs and Hulks are two examples of such cargo ships. Many ports would develop their own extensive trade networks. The English port city of Bristol traded with peoples from what is modern day Iceland, all along the western coast of France, and down to what is now Spain. During the Middle Ages, Central Asia was the economic center of the world. The Sogdians dominated

9794-581: The material cultures of India and China. Indonesians , in particular were trading in spices (mainly cinnamon and cassia ) with East Africa using catamaran and outrigger boats and sailing with the help of the Westerlies in the Indian Ocean. This trade network expanded to reach as far as Africa and the Arabian Peninsula , resulting in the Austronesian colonization of Madagascar by the first half of

9912-651: The mountains of Afghanistan was the largest source for trade of lapis lazuli . The material was most largely traded during the Kassite period of Babylonia beginning 1595 BCE. Adam Smith traces the origins of commerce to the very start of transactions in prehistoric times. Apart from traditional self-sufficiency , trading became a principal faculty for prehistoric people, who bartered what they had for goods and services from each other. Anthropologists have found no evidence of barter systems that did not exist alongside systems of credit. The earliest evidence of writing in

10030-456: The movement of gold and other resources sent out by Muslim traders on the Trans-Saharan trading network. Beginning in the 16th century, European merchants would purchase gold, spices, cloth, timber and slaves from West African states as part of the triangular trade . This was often in exchange for cloth , iron , or cowrie shells which were used locally as currency. Founded in 1352,

10148-464: The nation against foreign enemy, and to protect citizens against its fellows". He also admitted that although privatization of national defense could reduce the overall cost, he has not yet thought of a way to make this privatization possible. Other important contributions include his critique of the Phillips curve and the concept of the natural rate of unemployment (1968). This critique associated his name, together with that of Edmund Phelps , with

10266-521: The other in economics at the University of Chicago . Friedman chose the latter, earning a Master of Arts degree in 1933. He was strongly influenced by Jacob Viner , Frank Knight , and Henry Simons . Friedman met his future wife, economist Rose Director , while at the University of Chicago. Friedman was also the student of Friedrich Hayek . During the 1933–1934 academic year, he had a fellowship at Columbia University , where he studied statistics with statistician and economist Harold Hotelling . He

10384-403: The outbreak of World War I in 1914. Trade openness increased again during the 1920s but collapsed (in particular in Europe and North America) during the Great Depression of the 1930s. Trade openness increased substantially again from the 1950s onward (albeit with a slowdown during the oil crisis of the 1970s ). Economists and economic historians contend that current levels of trade openness are

10502-488: The part of the Federal Reserve . Robert J. Shiller describes the book as the "most influential account" of the Great Depression. During 1935, he began working for the National Resources Planning Board, which was then working on a large consumer budget survey. Ideas from this project later became a part of his Theory of the Consumption Function, a book which first described consumption smoothing and

10620-488: The press or in classrooms. Like Roberts himself, those guests making the most regular return appearances on the series are sympathetic to classical economic liberalism . Frequent guests include Mike Munger , an economist who teaches economics, political science , and public policy at Duke University , Don Boudreaux , an economics professor at George Mason University and a co-blogger with Roberts at Café Hayek, Arnold Kling , an economist and blogger who formerly worked for

10738-466: The production of some trade-able goods – including the production of scarce or limited natural resources elsewhere. For example, different regions' sizes may encourage mass production . In such circumstances, trading at market price between locations can benefit both locations. Different types of traders may specialize in trading different kinds of goods; for example, the spice trade and grain trade have both historically been important in

10856-768: The recession end in the United States. Also during the war, in 1944, 44 countries signed the Bretton Woods Agreement , intended to prevent national trade barriers, to avoid depressions. It set up rules and institutions to regulate the international political economy : the International Monetary Fund and the International Bank for Reconstruction and Development (later divided into the World Bank $ Bank for International Settlements). These organizations became operational in 1946 after enough countries ratified

10974-449: The removal of government intervention in currency markets , thereby spawning an enormous literature on the subject, as well as promoting the practice of freely floating exchange rates . His close friend George Stigler explained, "As is customary in science, he did not win a full victory, in part because research was directed along different lines by the theory of rational expectations , a newer approach developed by Robert Lucas , also at

11092-430: The rest of World War II working as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments. In 1945, Friedman submitted Incomes from Independent Professional Practice (co-authored with Kuznets and completed during 1940) to Columbia as his doctoral dissertation. The university awarded him a PhD in 1946. Friedman spent the 1945–1946 academic year teaching at

11210-586: The second half of the 20th century ... possibly of all of it". Friedman was born in Brooklyn , New York City, on July 31, 1912. His parents, Sára Ethel (née Landau) and Jenő Saul Friedman, were Jewish working-class immigrants from Beregszász in Carpathian Ruthenia , Kingdom of Hungary (now Berehove in Ukraine). They emigrated to America in their early teens. They both worked as dry goods merchants. Friedman

11328-461: The sole effective sea power in the Mediterranean with the conquest of Egypt and the near east. In ancient Greece Hermes was the god of trade (commerce) and weights and measures. In ancient Rome, Mercurius was the god of merchants, whose festival was celebrated by traders on the 25th day of the fifth month. The concept of free trade was an antithesis to the will and economic direction of

11446-428: The sovereigns of the ancient Greek states. Free trade between states was stifled by the need for strict internal controls (via taxation) to maintain security within the treasury of the sovereign, which nevertheless enabled the maintenance of a modicum of civility within the structures of functional community life. The fall of the Roman empire and the succeeding Dark Ages brought instability to Western Europe and

11564-493: The story in which the theory of the new classical Phillips curve was embedded radically changed. This modification, however, had a significant effect on Friedman's own approach, so, as a result, the theory of the Friedmanian Phillips curve also changed. Moreover, new classical adherent Neil Wallace , who was a graduate student at the University of Chicago between 1960 and 1963, regarded Friedman's theoretical courses as

11682-545: The trading nation as a whole for the benefit of specific industries. In 1799, the Dutch East India Company , formerly the world's largest company, became bankrupt , partly due to the rise of competitive free trade. In 1817, David Ricardo , James Mill and Robert Torrens showed that free trade would benefit the industrially weak as well as the strong, in the famous theory of comparative advantage . In Principles of Political Economy and Taxation Ricardo advanced

11800-698: The transitory component. Milton Friedman's research changed how economists interpreted the consumption function, and his work pushed the idea that current income was not the only factor affecting people's adjustment household consumption expenditures. Instead, expected income levels also affected how households would change their consumption expenditures. Friedman's contributions strongly influenced research on consumer behavior, and he further defined how to predict consumption smoothing , which contradicts Keynes' marginal propensity to consume . Although this work presented many controversial points of view which differed from existing viewpoints established by Keynes, A Theory of

11918-464: The use of money ) as an early form of trade, money was invented before written history began. Consequently, any story of how money first developed is mostly based on conjecture and logical inference. Letters of credit , paper money , and non-physical money have greatly simplified and promoted trade as buying can be separated from selling , or earning . Trade between two traders is called bilateral trade , while trade involving more than two traders

12036-453: The virtues of a free market economic system with minimal government intervention in social matters. In his 1962 book Capitalism and Freedom , Friedman advocated policies such as a volunteer military , freely floating exchange rates , abolition of medical licenses , a negative income tax , school vouchers , and opposition to the war on drugs and support for drug liberalization policies . His support for school choice led him to found

12154-563: The years about the role that I played in making possible the current overgrown government we both criticize so strongly." In 1940, Friedman accepted a position at the University of Wisconsin–Madison, but left because of differences with faculty regarding United States involvement in World War II. Friedman believed the United States should enter the war. In 1943, Friedman joined the Division of War Research at Columbia University (headed by W. Allen Wallis and Harold Hotelling ), where he spent

12272-613: Was "the 'guru' of the Reagan administration ". In 1988, he received the National Medal of Science and Reagan honored him with the Presidential Medal of Freedom . Friedman is known now as one of the most influential economists of the 20th century. Throughout the 1980s and 1990s, Friedman continued to write editorials and appear on television. He made several visits to Eastern Europe and to China, where he also advised governments. He

12390-655: Was a symbol of spiritual and political power and privilege." In the 16th century, the Seventeen Provinces were the center of free trade, imposing no exchange controls , and advocating the free movement of goods. Trade in the East Indies was dominated by Portugal in the 16th century, the Dutch Republic in the 17th century, and the British in the 18th century. The Spanish Empire developed regular trade links across both

12508-690: Was also for many years a Trustee of the Philadelphia Society . Friedman had two children, David and Jan . He met his wife, Rose Friedman (née Director), at the University of Chicago in 1932, and wed six years later, in 1938. Friedman was noticeably shorter than some of his colleagues; he measured 5 feet 0 inches (1.52 m), and has been described as an "Elfin Libertarian" by Binyamin Appelbaum . Rose Friedman , when asked about Friedman's successes, said that "I have never had

12626-408: Was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy . With George Stigler , Friedman was among the intellectual leaders of the Chicago school of economics , a neoclassical school of economic thought associated with the work of

12744-605: Was an alliance of trading cities that maintained a trade monopoly over most of Northern Europe and the Baltic , between the 13th and 17th centuries. Portuguese explorer Vasco da Gama pioneered the European spice trade in 1498 when he reached Calicut after sailing around the Cape of Good Hope at the southern tip of the African continent. Prior to this, the flow of spice into Europe from India

12862-561: Was back in Chicago for the 1934–1935 academic year, working as a research assistant for Henry Schultz , who was then working on Theory and Measurement of Demand . During the 1934–1935 academic year, Friedman formed what would later prove to be lifetime friendships with George Stigler and W. Allen Wallis , both of whom later taught with Friedman at the University of Chicago. Friedman was also influenced by two lifelong friends, Arthur Burns and Homer Johnson. They helped Friedman better understand

12980-459: Was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, the quantity theory of money . Monetarism is the set of views associated with modern quantity theory. Its origins can be traced back to the 16th-century School of Salamanca or even further; however, Friedman's contribution is largely responsible for its modern popularization. He co-authored, with Anna Schwartz, A Monetary History of

13098-556: Was controlled by Islamic powers, especially Egypt. The spice trade was of major economic importance and helped spur the Age of Discovery in Europe. Spices brought to Europe from the Eastern world were some of the most valuable commodities for their weight, sometimes rivaling gold . From 1070 onward, kingdoms in West Africa became significant members of global trade . This came initially through

13216-416: Was followed within a few years by the infant industry scenario developed by Mill promoting the theory that the government had the duty to protect young industries, although only for a time necessary for them to develop full capacity. This became the policy in many countries attempting to industrialize and out-compete English exporters. Milton Friedman later continued this vein of thought, showing that in

13334-692: Was in existence for at least 3,000 years, where its peak production was from 2000 BCE to 500 CE, older than the Silk Road in mainland Eurasia and the later Maritime Silk Road . The Maritime Jade Road began to wane during its final centuries from 500 CE until 1000 CE. The entire period of the network was a golden age for the diverse societies of the region. Sea-faring Southeast Asians also established trade routes with Southern India and Sri Lanka as early as 1500 BC, ushering an exchange of material culture (like catamarans , outrigger boats , sewn-plank boats, and paan) and cultigens (like coconuts , sandalwood , bananas , and sugarcane ); as well as connecting

13452-518: Was increasingly the preferred choice rather than chert from the late Mesolithic to Neolithic, requiring exchange as deposits of obsidian are rare in the Mediterranean region. Obsidian provided the material to make cutting utensils or tools, although since other more easily obtainable materials were available, use was exclusive to the higher status of the tribe using "the rich man's flint". Obsidian has held its value relative to flint. Early traders traded Obsidian at distances of 900 kilometres within

13570-413: Was originally published in 1957 by Princeton University Press , and it reanalyzed the relationship displayed "between aggregate consumption or aggregate savings and aggregate income". Friedman's counterpart Keynes believed people would modify their household consumption expenditures to relate to their existing income levels. Friedman's research introduced the term "permanent income" to the world, which

13688-435: Was the average of a household's expected income over several years, and he also developed the permanent income hypothesis . Friedman thought income consisted of several components, namely transitory and permanent. He established the formula y = y p + y t {\displaystyle y=y_{p}+y_{t}} to calculate income, with p representing the permanent component, and t representing

13806-433: Was the first in his family to attend a university. Friedman was awarded a competitive scholarship to Rutgers University and graduated in 1932. Friedman initially intended to become an actuary or mathematician, however, the state of the economy, which was at this point in a depression , convinced him to become an economist. He was offered two scholarships to do graduate work, one in mathematics at Brown University and

13924-529: Was their fourth child and only son, as well as the youngest of the children. Shortly after his birth, the family relocated to Rahway, New Jersey . Friedman's father, Jenő Saul Friedman, died during Friedman's senior year of high school, leaving Friedman and two older sisters to care for their mother. In his early teens, Friedman was injured in a car accident, which scarred his upper lip. A talented student and an avid reader, Friedman graduated from Rahway High School in 1928, just before his 16th birthday. He

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