And it was an attempt as a professor at the university of chicago i came back from the meeting piaster i had been and i told him that i had been called by hayek to try to bring together some believers in free and open in society to have them to have interchange with one another. He said reading of the veterans of the wars of the 20th century. [laughter] i thought that was wonderful and we were fostering is essentially the same set of ideas. The road to serfdom published 50 years ago, was really an amazing event when it came out. It is hard to remember now what the attitude was 1944. The Movement Toward centralization, planning, it also started with a society late 19th century with George Bernard shaw. And so on. But the war itself you have to have government control. But after the war you needed a rational plan and, organized society that was the atmosphere. Those of us who did not agree with 19th century liberalism works for quite a number of us. But for the rest of the world they were very isolated and his idea to bring them together to enable them to get encouragement from one another without having to look around who was trying to stab them in the back which was a set situation with their home country. Cspan i saw at the peace on the New York Times your introduction. Why did they do that . What got their attention . Guest i cannot answer that. Ask the people at the New York Times. As a whole they have not been very favorable. Quite the contrary but they have been changing. Two or three years ago they turned down many an oped piece from me. But a couple of years ago they did publish a piece about the situation of the fall of the berlin wall. My thesis was simple. Everybody agrees as a result that socialism has been a failure. Everybody agrees that capitalism has been a success within improvement of conditions of ordinary people all over any length of time. And yet every petty is extending socialism. After the fall of the berlin wall there was no summits in washington how to cut government. But that we have too expensive of the government and everybody agrees. Paillette but where rigo we have to extend socialism son is how you enable government to get more revenue for government to be more important which is exactly the opposite. Socialism is the way to guide behavior in strict contrast to what we believe to be the facts. Cspan let me ask you about friedrich hayek. Guest he was an economist, born in vienna, started his professional career in vienna and in the mid or late twenties some people in britain greatly impressed with the book he had written in the work he had done. At a relatively young age he became a professor at the school of economics. He spent thirties and most of the forties there. Early in the 1950s he came to the university of chicago where he was professor for about 10 years then he went back to germany essentially she retired there. Cspan how long has he been dead . Guest about two years now. He lived to be 90 and published in enormous, list of books and articles. The road to serfdom that we are showing here was a manifesto and a call to arms to prevent the accumulation of the totalitarian state totalitarian state it is dedicated and to the socialists of all parties. Because the thesis of the book is that socialism paves the way to totalitarianism. And socialist russia at the time is not different from nazi, germany. Indeed, it was national socialism. This was a manifesto with the unexpected defect. Nobody was turned down both of britain and the United States to create a sensation that was a best seller. It had of big argument with the reactionary against all the good things of the of world. To show the of class status. This was the very subtle analysis of why are how is wellmeaning people only intent to improve their lot which have exactly the opposite effect. From my point of view the most interesting chapter is one labeled why the worst rise to the top. It is another example of a famous statement and now for a moment how power corrupts. Cspan because he is quoted several times in the book. Guest board acted was a great defender of a free society. And why it rises to the top if you were given how are you are driven by that necessity to do things and many people would object to doing and toledos who are willing to be safe differently will ever make it to the top. Cspan who was lord acton . Guest in english catholic who was a great historian. I had forgotten the title but he wrote a history of liberty and also was very much involved with the dispute within the Catholic Church about the infallibility of the pope. What do they call it . It is not cyclical but like the vatican . That they declared the infallibility and he fought very hard against that. Cspan why is it so many conservatives that they will cite you but also hayek . Guest as i said in the introduction i have gone around of the years asking about the shift of belief for government than socialism. What led them to the understanding . Over and over the answer is the road to serfdom. Cspan you wrote the introduction in 1971 . Guest the 25th anniversary tuesday german edition. Here is primarily the same is just as much now as then. The real trouble something is everybody is persuaded that socialism is a failure but yet in practice remove down the socialist road. In 1944 but 46 or 50 just after the war if i remember a the numbers Government Spending in all levels. That does not allow for the fact with the aid for that act and so on so we are more have socialist today more than half of the total output of the country. And in a way determined by the government. Regulation with writer sells to be a free society. But just consider the limitations of our freedom. Just because you want to be a lawyer you have to be approved and get a license. That is true for beauticians, plumbers, is in the york city for taxicabs and most big cities, there are enormous limitations of what we can do. Consider the question of freedom space speech. During the 50s and 60s and 70s with a big problem of inflation the government made a big push about selling savings bonds. That really feel immelt that he paid for the savings bonds you would never get back with purchasing power. You held it 25 years at the end uturn didnt not only because of the purchasing power because of inflation but then you had to pay tax on the and come and come. At the same time leading bankers were joining in the advertisements to tell people to buy savings bonds. I would ask the Bank President s why they did that . It i said to buy them for years of . Know is it a good investment . No. Why do tell the public it is . Because the treasury would not like if we did not. Do you suppose i know from experience ive opposed to tenure at universities. But how many academics, the only ones that were free to speak that way that have permanent tenure on the verge of retirement. From the point of view there are a Service Restrictions on what we can do or say. But does not count the loss of freedom that they take money away from hard working and productive people and give it to people who were out of work or on welfare. It does not include the property rights. nr said has led to tremendous invasions. You could have a Drug Enforcement person come to your door and knock because some person said youre dealing with drugs. There are many. Heartbreaking cases. Whose property has been taken away and an able to regain it. I am a very old man i graduated from high school 1928. That is a long time. Look at this situation we were much for poorer with physical goods. No washing machine or microwaves. We are enormously wealthy and a higher standard of living. On the other hand, were safer, more secure, a freer in 1928 than we are now. Is pending tender 15 of the national in comes the of private sector the government controls over half of the National Income and private enterprise controls the rest. Where have all these good things come from . Katy named these additions . It wasnt government that produced the microwave for the improved automobiles or computers but on the other hand, consider the problems. Their social the major problems the underclass that theyre much less safe there we graduated in much less the earlier feeling of security and much less optimism of the future and all the problems produced by government the quality of schooling i got in public highschool in 1928 was almost certainly a great deal higher than you can get in any small number of schools. With the decline of scores of the s. A. T. Why . Because education is the most socialized industry in the United States. 90 percent of the kids are public schools. 10 private and the education is completely centralized and socialized system. And the benefits a small number and especially those associated with the American Federation of teachers the National Education association it does a lot of harm to people. Cspan what about your own beginning . Where were you born . Guest i was born in brooklyn but i had sense enough to move out when i was 13 months. My parents moved to new jersey as smallscale businessmen whod never had a income that would exceed the poverty standard but then they had a small Textile Factory that was the unsuccessful so they opened a small retail store that was the source of their income. Cspan well as their source of influence for college . Guest very little except they encourage me. My father died before i graduated from school. But i was only one of the for that to go to college. Cspan state school . Guest at that time it was not. Wreckers was established before the revolution by the Dutch Reformed Church at the time i went it was predominantly entirely a private school. May subsequently was a converted to the naked state university. Hold on. But i could go because of an action of the state. The state of new jersey at that time offered a scholarship on a competitive basis with a series of exams. Those who could demonstrate financial need received tuition or free tuition and because of that i could go to rutgers. The tragedy at the time was very valuable now has a Similar Program but the qualification for getting a scholarship is below average academic quality to raise the lesser qualified. And instead of the sizing strengthening the opportunities but to shift to a state of victims with the emphasis on raising the people of. But it always comes from the top. With society as a whole. Cspan when did you first get into economics . Guest when i first went to wreckers. Cspan why did you pick it . Guest i know. Id like mathematics. I was good at mathematics. I may say i worked my way through. As an innocent use the only way i knew thieus mathematics to earn the income was to work for insurance companies. That was mike initial objective. Somehow i got into economics. But i dont know. I gradually did 1932 th÷ei situation was different in the midst of the worst depression in thezu major problems for economic. But as a happened when i graduated in 32 always able to get to scholarships went from Brown University in applied mathematics m1 for applied economics in doozies ctc why i took it at that time. Cspan a couple of your buck somebody have you written . Guest i dont know. 15 if the best seller is undoubtedly free to choose that was written by myself and by my wife. Based on the tv program of the same title than part program shown in 1980 on pbs. In reverse of the usual procedure it was not based on the book but i insisted i would not talk to are written script for a the transcript of that tv program although the of best seller is the running from 1963 it was so out of favor so far outside the atmosphere at the time it was not reviewed at any major paper magazine other than the economist of london. Not the tribune, the times, newsweek, none of that. But that is over 30 years. It sold half a million copies. Cspan the tie that you are wearing . Guest that is adam smith. Guest he comes up in all your books. Guest the founder of modern economics. He lived in the 18th century. His book the wealth of nation published 1776 the same year as a declaration of independence. Cspan when did you first read it. Guest in college as an undergraduate. Cspan is he most important in your education . Guest he had a major influence on all of us but after all it comes from people who were living people. Books influence no doubt about it. But the person who is the most important in my education there are several. One is chairman of the Federal Reserve he was out wreckers and taught me as the undergraduate as my mentor for a large part of my professional career. But then i went to the University Near chicago. Jacob, frank, Henry Simon Hugh help to shape my views. Cspan when did you thank you had enough independence sought to write books like free to choose . Guest very late. Up until that point prior to that favor scientific. Fes books give a misleading impression. These really do not have been a great interest. That is the best seller of the free to choose but no question the most influential book but as many copies as the monetary history of the United States was schwartz. With the very large body of economic literature. Cspan where did you meet your wife . Guest the first course of economics of chicago 1932. We took the same course. And as it happened jake of a finders ceded his students alphabetically to remember their names. So rowes director sat next to Milton Friedman. In addition and she said she was the only girl in the class. [laughter] at the time. Cspan when did you decide to write books together how do you separate that responsibility . That is hard to answer. We read very 19386 years after remit. Then we had children. Roasted a wonderful job to be an inspiration and take care of the house the she had a professional career before that and had written something san worked in Church Organizations before that. But not until the kids were grown and off to college there she could spend the time working with me. So this is based on a series of lectures she looked at those and reworked them into the book. Cspan janet and david . Guest my children. Cspan you dedicated to them. Guest janet is that davis california her husband , she is a lawyer but her husband is a computer specialist who teaches at the davis branch of the university. My son david has a checkered career in the sense he guided degree, a ph. D. In physics but became an economist never took a course except over the dinner table. He is at the university of cspan when do to win the nobel prize . Guest 1976. For monetary history of the United States. With the theory of the consumption function. But this theory is in my mind the best thing i ever did. Monetary history is no doubt the most influential and free to choose so theyre not similarly characterized. Cspan i will take it another step. Tell the pencil story. Guest i am delighted. Cspan why do you use this . That did not originate with me i got it from the head of the foundation of Economic Education but it is used to tell how the market works and it is used to tell how things, how people can Work Together without knowing one another or of being the same relations. The story starts like this that leonard reid and i held up a pencil. And we said nobody knows how to make a pencil that a Single Person in the world knows how to make a pencil. You have to get would for the outside. Can you have to have blogging, somebody ought to manufacture the saws. No Single Person knows how to do all that. What is called lead is not letting it is graphite and comes from the minds of latin america and order to make a pencil you have to get the lead. The rubber at the tip is is, nowadays it is not even Natural Rubber but at the time it was. It comes from malaysia although the of rubber tree is not native to malaysia but was imported into malaysia by english biologist or botanists i mean. So in order to know how to make a pencil you have to do all of these things. There are thousands who have cooperated together to make a pencil. Somehow the people in south america through dugout the graphite, cooperated with the people in malaysia who tapped the rubber trees trees, cooperated with the people in oregon who cut down the trees, these thousands of people and dont know one another, speak different languages, come from different religions and may hate one another but what enabled them to cooperate . The existence of a market. In the answer is the people in latin america were allowed to take up the graphite because somebody was willing to pay them. They do not have to know who or what it would be used for but that somebody would pay them. Going back to hayek one of the most importer important articles he wrote not in the book was about the way that prices are a means of an information mechanism. The role of prices to transmit information. If there is an increase in the demand for graphite, how do people find out about that . Because the people who want more graphite to offer a higher price. The people in latin america dont have to know anything about why. Who is willing to pay the higher price . The price transmits the information that graphite is more scarce and in demand. Kodak to the pencil what brought all these people together was an enormous complex structure of prices the price of rubber, the wages paid and so on. A marvelous example of how you can get a complex structure which there was nobody who sat in the Central Office to send in order to malaysia to produce another bowl of rubber or it was a market that coordinated it all without having to know all the people involved. Cspan how many times have used told that story . [laughter] guest not that many times. I did on the tv programnewo12ru an end in the book but i think this is the third time cspan you were living in San Francisco earlier. What brought you here . Guest at the age of 65 at that time living in chicago. I decided i graded all the papers i would grade. My wife lived in Portland Oregon