Era. Today would have been dr. Friedmans 102nd birthday. I have no doubt it will be marks best presentation yet. Why am i willing to go out on a limb . As an economist might put it, on the one hand, according to the website, superscholar. Org, mark is one of the top 20 living economist in the world. I guess that designation is a gentle way of reminding us that, as a no longer living economist famously said, in the long run, were all dead. [laughter] but i digress. Marks topranked status was echoed by a columnist for scientific american, who recently wrote that he has emerged as one of the clearest writers on all matters economic today. On the other hand, mark comes by his knowledge of Milton Friedman on a firsthand basis. As he will reveal, they had a dear, but occasionally prickly relationship. The two of them constantly argued over a variety of issues, but always remained cordial. Mark was probably the last person to go out to lunch with Milton Friedman he for he died before he died of a heart attack on november 16, 2006. Mark will recount their friendship and discuss their differences over money, education, taxation, the nobel prize, religion, and host of other topics. Only once did things get a tad out of control, a moment when mark tore up Milton Friedmans 20 bill. [laughter] i will let him regale you with the details of that story. Scousen is a jack of many trades and a master of most of them. A phd in economics from George Washington university, he has been a university professor, an economist, an investment expert, entrepreneur, and the author of more than 25 books. Mark has taught economics and finance at columbia Business School, columbia university, mercy college, and rollins college. And barnard college. He has been a president ial fellow at chapman university. He has been a consultant to ibm, and other fortune 500 companies. In honor of his work in economics, finance, and management, Lansing University grant them Business School renamed their Business School after him. I think the most interesting thing to me about his extraordinary pedigree is that based on one of his works of scholarship, it was published by nyu in 1990 and then again in 2007, because of that come the federal government began issuing a more accurate measure of the economy. Every quarter, gross output along with gdp. That is quite a distinction. Tonights program is funded by a grant from the Friedman Foundation of educational choice. It is cosponsored by Grantham University and the shelby institute. Ladies and gentlemen, please welcome marc scousen. [applause] i love that introduction. You set me up very well. This is the 102nd birthday of Milton Friedman. I did have lunch with him right before he died in 2006. He was frail, this is a picture of us together, he was unshaven, he had forgotten about our luncheon. His wife reminded him. He was about 94, 95 at the time. It looks like you will live to i asked him it looks like you will live to be 100, are you excited . He said, i hope not. He was a little bit frail and losing his eyesight. For a scholar to lose your eyesight like that it is , difficult. He had hearing problems, a lot of problems. I had my very first luncheon with friedman in the early 1980s. We were at a conference together i noticed he was on the program. I met him a couple of times before, but he really did not know who i was. I called him on the phone and i said listen, can we have lunch together . We are here at this conference and he said yes, that would be fine. This was in laguna miguel, i think this was at the ritz carlton. A Beautiful Hotel overlooking the ocean. There we were the two of us for a couple of hours, just the two of us, talking about anything we wanted. I was talking with a Nobel Prize Winning economist, the premier advocate of free Market Economics in the 20th century. We were having a wonderful time together. Lunch ended and the bill came and i grabbed the bill and paid with a credit card. I said to him, all my life, i have heard your statement, there is no such thing as a free lunch. There is no such thing as a free lunch. He had written a book on this subject burden. I dont want to cover here again your statement, there is no such thing as a free lunch, as i am paying for yours. He said, that was not a free lunch. I had to listen to you for two hours. [laughter] anyway, here is the picture that i was showing Milton Friedman that he got a real belly laugh out of. This is George Stigler who worked with Milton Freeman for many years. Milton friedman in the middle. Aohn Kenneth Galbraith friend of jfk and very much a kenyan economist. Just keynesian economist. George had a very wry sense of humor. He said all economists are tall. There are two exceptions. John kenneth golf rates and Milton Friedman. [laughter] that is a classic line. I showed this to ben bernanke once and he did not have a sense of humor. [laughter] the man said, that is not logical. That was his answer. Anyway, i had a lot of fun times with Milton Friedman over the years, but our debates got heated from time to time. He was a tough debater. It has been said that Milton Friedman never lost a debate in his entire career. His wife would dispute that, but nevertheless, i saw friedman in action and i never wanted to debate with him. Last year, i was in the London Underground with paul krugman. He has quite a high opinion of himself. Im one point, i said, paul, have you ever lost a debate . He said i really dont think so. I said, it is too bad Milton Friedman is not alive because he would lose. You would lose. He humbled himself enough to admit that was probably true. Anyway, just for those of you who may not know much about Milton Friedman, let me go over a brief career about his life. He was an academic, he has written some bestselling books, and he was probably the best wellknown economist of his age. Born in 1912 in brooklyn, attended rutgers university, took a parttime job to pay his way through school, from immigrant parents. He was dirt poor and worked as a waiter. Can you imagine . Went to university of chicago as an undergraduate. Married Rose Friedman. They had two children, david and janet. In the 1940s, worked for the u. S. Treasury department. His claim to fame, perhaps infamy, is that he is the one who proposed to the treasury that to pay for the war, we must begin withholding. Tax withholding started with a Milton Friedman suggestion. One that he seemed to regret after that, being such an antigovernment type of person. Withholding allows a very high level of taxation. Prior to the 1940s, you pay taxes only on april 15. You sent in the full amount. If you are going to become a large government were government is taking 20, 30 of your income, you will have to have withholding. He made that government more efficient as a result. In 19461977, most famous for being an economist, a professor of economics at the university of chicago. That is where he did all of his work. In 1947, the year of my birth, he was a Founding Member of the Mount Pellerin society, which is a group of economic thinkers from all around the world to gather every year or so to discuss and present papers and so forth. Ive been a member since 2002. It is by invitation only. We are meeting in hong kong in august. He was the one who not made me who nominated me to be a member of the society. I consider that a real honor. He started writing books. His two most famous books are capitalism and freedom that is this book right here. This is my own copy that i bought in the 1960s, read it as an undergraduate. If you look at this book, it is a wellworn copy. I was enamored with this stuff. One of my pet peeves is academic books that do not have an index and this one did not have an index. My claim to fame, i got the university of chicago to put an index and here it is in here because i complained. Milton, you have to have an index for this book. So he got the university of chicago to do that. That is my claim to fame. Then a year later, he came out with a book that really set him on the map. A monetary history of the United States. From 1860 at the civil war all the way through after the civil war, 1867 through 1960, he did an exhaustive study of Monetary Policy, Federal Reserve, lots of notes and comments and stuff like that in this book. I will tell you that what made him famous in this book and i would love to write a book like this there is one chapter. One page one paragraph one sentence in this book that changed forever the way people think about the Great Depression and the Federal Reserve. Want me to read it . Maybe i shouldnt. [laughter] you have to go out and buy this book just to turn to page 292. Monetary from the cyclical peak in august 1929, to the cyclical trough in march 1933 that is the Great Depression, right . The stock of money fell by over a third. The money supply declined by over a third. Prior to 1963, prior to the publication of this book, nobody knew that. Do you know why . If you heard of m1 and m2 definitions of the money supply, prior to this book, nobody compiled money supply figures. Nobody brought them together until Milton Friedman and his coauthor put these together and then discovered that despite all the efforts by the Federal Reserve to do whatever they could to keep the Great Depression and keep banks from failing, the money supply collapsed by a third. This is what ben bernanke learned in his 2002 they had this big meeting honoring Milton Friedman at the dallas fed and ben bernanke wrote an article about that meeting and said, we want to apologize on behalf of of the fed for the major blunder that we committed and causing the Great Depression. We have learned our lesson, mr. Friedman. We will never let it happen again. But they came close, didnt they . You do not know how close they came to having another Great Depression in this country. It was not necessarily caused by the Federal Reserve. I think they pushed the economy over the cliff. And then held out a lifeline. Very interesting experience there. The impact of this book. You cannot discount the impact of this book has had on the way we view dealing with crises in the future. And then this other book, capitalism and freedom, those are the two books if you go into any barnes noble bookstore do they still have those . You go into any bookstore and you will find a copy of capitalism and freedom with my index [laughter] right along with all of the other classics like the communist manifesto and so forth. There is another book 1976, nobel prize in economics. Why do you think you won the nobel prize in economics . Is there any book that you can point to, folks . Perhaps a single chapter . Perhaps a single paragraph . Perhaps a single line . There is hope for any of you in this audience. [laughter] you can win the nobel prize if you have a sentence that has such an impact like this man did. He won the nobel prize for this work. That catapulted him to a whole new era. Imagine, who would you give the nobel prize to on the bicentennial of the declaration of independence . Of course, you will give it to a person who reflects, who single symbolizes the declaration of economic independence from which is the wealth of nations, which was published in the very year that Thomas Jefferson wrote a declaration of political independence. It is all coming together. All of the stars are aligning. 1976, bicentennial celebration of the wealth of nations, a declaration of economic independence and the declaration of independence by Thomas Jefferson, both in the very same year. Who better to give the nobel prize to van this man right here to this man right here . Milton friedman. It was a tremendous source of pride to him and that catapulted him to become a very famous person. Certainly among economists. There is a book called bluff your way in economics. It is sold in england. Bluff your way through opera, bluff your way through cricket. They have one in economics, can you imagine . If you know the five most famous economists today, you can bluff your way through economics. You can pretend to be a phd economist because you know these five individuals of these famous economists. And they are adam smith, karl marx, john maynard keynes, number four is john Kenneth Galbraith. The 69 economists, you cannot miss him. And the fifth one is Milton Friedman. Sorry, George Stigler, you did not make the list. Now you all can bluff your way in economics. You can walk out of this meeting, you do not even have to buy my book, and you can be a knowledgeable person in economics. Isnt that great . In 1980, he did a pbs program that several Million People some of you may have seen this it was called free to choose. It was a Wonderful Program and it in energized both milton and Rose Friedman. Producer, took them all around the world. He began each program with a short 10 minute speech. And then he invited people into disagree with him. Wonderful debates and these panels and this was a great program. He put it together in a book. Milton friedman holding a pencil and Rose Friedman on the back. Another wonderful book that has an index. Free to choose. I should tell you, if you came to my home in new york, i have a library. I have opposite title book. I will have a book called rising asia and right next to it will be falling asia. Or i will have the two corners of my books, the alpha strategy. And then the omega strategy. Another one is how to win friends and influence people. But i have one right next to it, how to alienate people. It is a wonderful combination. I put the two books together. I have free to choose and right next to it, free to lose. An introduction to marxist economics philosophy. That is so true. Here is the difference. Who was the optimist and who is the pessimist . If you believe in choice, you will make mistakes, but most of the time, you will make the right choice according Milton Friedman. He is the optimist. Americans tend to be optimists. Have you ever met a marxist who was optimistic about capitalism and the world . No. A big difference in philosophy and personal attitudes. The twilight of his life, from 19772006, he was at the Hoover Institution at stanford university. He had this beautiful home on the 17th floor of this skyscraper apartment in the San Francisco and he bought it with the money he got from the nobel prize. I spent some time visiting him there. A wonderful experience. That is a little bit of an overview of Milton Friedmans life. This is a picture of milton and Rose Friedman. I picked this because he had always said he and stigler had some interesting points of view. Stigler was always saying that competition is a tough we, not a delicate flower. Competition can get you to produce what you want. It is a tough weed. Its hard to get rid of it in the capitalist system. Friedman would always say, freedom is a delicate flower. Who did he marry . Rose friedman. [laughter] i said, listen, can you get me a photograph of rose holding a rose . And then i would have the quote, freedom is a rare and delicate flower. Can you help me . Nope. Rose hates roses. [laughter] that was his answer. Somebody gave her roses, so i got the picture, but it is not in color. Maybe i could have it colorized. There are two freemarket schools of economics. Friedman i mentioned the Mount Pellerin society. His colleague who taught at the university of chicago, he was an austrian economist. You can see this is about the Austrian School of economics and the Chicago School of economics. Are they friends or are they foes . A little bit of rivalry between these two schools. They agreed on some things and disagreed on other things. Both of them won nobel prizes. Milton friedman won the nobel prize. Hayak won a nobel prize on Business Cycles in the stigler 1930s. Won the nobel prize as well. Meeses should have won a nobel prize. Can you notice some differences between the austrianeuropean economist on the lefthand side and the american economist on the righthand side . Glasses and hair. That is true. I will tell you the austrians are supreme pessimists, as they suffered from two major world wars and a Great Depression in between. The two americans are very upbeat and optimistic. A lot of differences between the two. I will spend a little bit of time if you have questions, are we going to have a microphone . If you have a question in m