REASON Interview: Milton Friedman


Called "an uncompromising champion of the free market and one of the most effective defenders of capitalism in America" by no less than Henry Hazlitt, Milton Friedman is nonetheless a controversial figure among some defenders of liberty. For Friedman, you see, plays the Establishment's game. He uses the same empirical, mathematical economics as the interventionist economists—but uses it to document the failures of interventionism. He is willing to work within the political system, offering advice (when asked) to political candidates and officeholders (including Jimmy Carter and Chile's General Pinochet). Besides dreaming dreams of an ideal free society, Friedman develops and promotes interim measures designed to cope with the realities of today's government interventions—measures like education vouchers and tax limitation amendments.

Clearly, this is not everyone's cup of tea. Reasonable people can differ over the tactical merits of particular reforms and the value of gradual vs. hard-core approaches to advocacy. Whatever their views of Friedman's positive proposals, few can argue with his effectiveness as a critic of government intervention and control. His lively Newsweek column brings free-market critiques to millions of readers, and his popular books—Capitalism and Freedom, An Economist's Protest, There's No Such Thing as a Free Lunchintroduce many students to pro-freedom ideas.

But it is his technical work in economics on which Friedman's reputation is based. Over the years Friedman has broken new ground in monetary theory and monetary history. His classic work, Monetary History of the United States, 1867-1960, coauthored with Anna Schwartz, demonstrates that central banking increases monetary instability and undercuts the case for government monetary management. It is largely due to Friedman's work that "monetarism" has come to be taken seriously by economists and policy makers in the 1970's.

Last fall Friedman's work was honored when he was awarded the 1976 Nobel Prize in economics. At the end of the year he retired from his position as Paul S. Russell Distinguished Service Professor at the University of Chicago. Though retired from teaching, Friedman continues to work. When we interviewed him several months ago in San Francisco he was hard at work on yet another research project, desk piled high with books, reports, and computer print-outs. We began by asking about the Nobel Prize award.

REASON: How did you feel about receiving the Nobel Prize, and what do you see as the significance of its being awarded to you?

FRIEDMAN: I was obviously delighted to receive it, financially and in every other way. But I really believe there is no special significance to be attached to it. Economics, as you know, is a fairly small discipline. Everybody knows the small group of people who are really in contention for an award of this kind. It's been clear for many years that I was in contention. I believe that almost no significance can be attached to the fact that it happened to be given to me this year.

REASON: When the Nobel selection was announced, there were some strong reactions in Sweden, as in other places, because of your having gone to Chile to give a number of lectures there. Could you clarify for our readers why you chose to do that and what you were doing?

FRIEDMAN: In the first place, I am a student of inflation. If a physician is going to study measles, he has to go where measles are; if an economist is going to study inflations, he has to go where inflations are. Over the years I have gone to a great many places where there are inflations, including Russia, Yugoslavia, Australia. South America is a good place to study real honest-to-God inflations, and Chile had one of the best inflations going at the time I went down there, which was close to two years ago now.

And so, when I was invited to come to Chile by a private foundation, under their auspices, to give a series of public lectures, I was induced to go for two very different reasons. The first was that as a scholar I wanted to see what honest-to-God inflation was like. Money was going at 20 percent a month when I was down there.

In the second place, the University of Chicago for a 10-year period, from the middle fifties to the middle sixties, had a cooperative arrangement with the Catholic University of Chile, under which they sent students to us to be trained in economics and we sent people down to Chile to help them improve their economic training program. As a result of this program, we had a series of extremely good students coming up from Chile, many of whom were in my classes and whom I got to know, and a great many of whom were involved in governmental activities in Chile. And this link that had been formed much earlier was the second factor that led me to want to go to Chile.

I had never been to Chile before and have not been to Chile since. My total stay consisted of exactly six days, during which I gave a series of public lectures of exactly the same kind I had given in many other countries on the relation between inflation and monetary variables. During this time I met with a large number of different groups of people—small businessmen, governmental officials, the military junta, including General Pinochet. I also met with some of the people who were opposed to the military junta in order to form some kind of impression of what was going on in Chile. I emphasize that I was not then and I never have been an official advisor in any way to the government. Every statement I made was made in public and has since been published. The lectures I gave have been published in Spanish translations. Since leaving Chile I have had no advising or counseling contact with anybody in the Chilean government.

REASON: Have you been annoyed by the allegations in the media that you supported the military regime by offering economic advice?

FRIEDMAN: I must say, I have not known whether to be more amused by the criticism I have received—which suggests that somehow by extrasensory perception from my office in Chicago I was able to control the day-to-day activities of the Chilean government—or to be annoyed by the misrepresentations which have been put out. I have no apologies to make for going to Chile. It was the right thing to do. I would not hesitate to do it again. I did not, in Chile or out of Chile, indicate any support of the political policies of the junta. It is a military government, it is an undesirable form of government.

REASON: Over the years you have proposed a number of ideas for "transition programs"—ways of moving in the direction of a free society. One of these is the idea of education vouchers. There have been a few piddling experiments in the last decade, but none really as you proposed it. Maybe you could say a few words on why you think the idea has not even been given a chance.

FRIEDMAN: HEW's Alum Rock experiment was a fake. There's no doubt about why—it's because of the opposition of the educational bureaucracy. Every time this has come up, it has been the teachers' unions and the school administrators who have fought tooth and nail against it being adopted. In New Hampshire, where I thought we had the best chance, where the head of the state Board of Education was strongly in favor of it and worked like a dog to get a Federal grant for it, some people at Dartmouth did a good job of developing a very detailed program for the experiment. In something like five districts the parents initially voted to try it. In every single one, the school teachers and administrators got to work and reversed that decision.

REASON: Does that mean there's no point in continuing to push the idea?

FRIEDMAN: No, but I think that experience does suggest that any effective program to have a voucher experiment will have to meet head-on the problem of overcoming the educational bureaucracy. One possible way is to try to restrict any voucher experiment to the slum areas of our big cities, because that introduces a conflict of interest on the part of the educational bureaucracy. Since the teachers in the public school systems do not want to teach in the slums, on the one hand, they wouldn't like the voucher experiment; on the other hand, they would love the idea of any development that would enable them to get out of having to assign some of their numbers to do slum teaching. And I wouldn't mind having the experiment restricted that way, because I believe that the voucher scheme would have the greatest potential for doing good in slum areas. Those are the areas in which the so-called education we provide is most ineffective, in which there is the greatest need for a free-enterprise voucher system in order to improve the education available to the slum dwellers.

REASON: How do you deal with the charge that a concept like vouchers is a betrayal of libertarian principle?

FRIEDMAN: As you know, I don't feel that way. I am not going to argue for a moment that if we were starting with a clean slate, in which there were no government involvement in schooling at all, I would necessarily be in favor of a voucher scheme. My advocacy of it derives from the existing situation, in which you have enormous government involvement, and from asking the question, How can we move in a direction of lesser government involvement, the direction in which all of us, your most extreme libertarians as well as myself, want to move? Maybe there will be an argument of how far we ultimately want to move, but at the moment we want to move in the same direction.

There is no possibility, in my opinion, of moving there overnight. Not only no possibility, but it's not desirable. You do have people who have commitments, you do have people having made arrangements for their lives. If you want to move in a direction of lesser government involvement, it seems to me that this proposal offers a gradual way in which you can move there, a way that is not only politically feasible but, much more important, will do no harm in the process. Now I have great doubts myself about the desirability of compulsory schooling, and I can well sympathize with those people who want to campaign against compulsory schooling.

REASON: Would you advocate abolishing compulsory schooling simultaneously with vouchers?

FRIEDMAN: One tactic that it seems most important to stress is the desirability of being prepared to do one thing at a time. It seems to me that the all-or-none approach—either you take my whole package or I won't play ball with you—is only a retreat into fantasy. It's only a way in which people can protect themselves from having to face up to the really hard problems of how you do move from where you are to where you would like to be.

REASON: You once stated that the Libertarian Party would perhaps serve the same role as the Socialist Party in the United States: it would never get into office but would shift the spectrum and move things in the right direction. Would you favor the Libertarian Party playing that role as opposed to the Fabian role of proposing gradual step-by-step reforms and attempting to get elected to implement them?

FRIEDMAN: The role that the Socialist Party played was not as a party that got elected, but neither was it as a party that was unwilling to support transitional moves. I don't believe that the two roles you've described are exclusive whatsoever. The Libertarian Party can play an important role as the Socialist Party did, in being a party of principle, but that doesn't exclude seeing how to apply those principles to the task of a gradual transition from where you are to where you would like to be.

REASON: This controversy seems to be the major, burning issue for the Libertarian Party today. Many members think that supporting gradualist programs amounts to a repudiation of libertarian principles.

FRIEDMAN: That's fundamentally intellectual cowardice. What does it do to say, I would like to have a world which is wholly different from the way it is now, but I will not specify any feasible way to go from here to there? That's asking for revelation, not analysis.

REASON: Let's take another issue that touches on this transition problem. In Capitalism and Freedom and elsewhere you have argued that Social Security is a bad system and ought to be abolished. Do you know of a specific transition plan that you think is feasible for getting rid of it without causing undue harm?

FRIEDMAN: My transition plan is very simple. You calculate the obligations that have already been assumed to those who are retired and those who are not. To every individual, the government gives a claim entitling him to that in the form of either the actual annual payments or the equivalent present value. Having done that, you then eliminate immediately all payroll taxes and all accumulation of future benefits. Everybody has gotten what you are committed to now. You have also imposed upon the Federal government a large obligation (which already exists). It's there now except it's unfunded. As the years roll by, you pay down that unfunded obligation out of general revenues. Now various other people, Jim Buchanan and others, have proposed even more gradual schemes which would involve enabling individuals to contract out and so on. On the whole, the simple plan I have just described is preferable to any of those.

REASON: You have also been involved in the National Tax Limitation Committee, promoting the concept of constitutional tax limits, limiting the percentage of income the government may take. So far, these efforts have failed to achieve success for apparently similar reasons to the failure of the voucher system: very strong vested-interest opposition. Do you have any ideas on how to make the tax limitation idea more salable?

FRIEDMAN: I think that the prospects for these are far brighter than the prospects for the voucher system. Let me point out one thing—people tend to be very impatient. But how many of the so-called reforms that have given us the welfare state were passed the first time they were put up? None of them. What happened is, they were proposed, they were knocked down, they were proposed, they were knocked down. Gradually, in the process of being proposed over and over again, they built a constituency. You can see that at work now with the national health insurance. It's been knocked down a half a dozen times. But that doesn't seem to be preventing its proponents from keeping it up.

So far, the tax limitation amendment has been defeated once in each of two states, and there's a tendency for people to throw up their hands and say, "Well, you see you can't get that passed." It seems to me that, on the contrary, they did extraordinarily well for the first time such a strange idea came up. In California the vote against it was something like 53 to 47 percent; in Michigan, 54 or 55 to 45 or 46 percent. In Michigan the opponents, mostly the Michigan Education Association, acting behind the veil of the League of Women Voters, marshalled a slush fund with three to four times more money than the proponents had. So they had to spend about three times as much per vote to beat it as our side had to spend to get our votes. I think that is a very favorable sign. The campaigns have been accustoming the voters to the issue, and I believe that this proposal will be on the ballot again in California and again in Michigan in the next year or two. It will be on in other states, and I will be very much surprised if it isn't passed in several states in the next couple of years. And once it starts passing and people become familiar with what's going on, I think there's a chance that there will be a snowball effect. So, I'm very optimistic about that movement.

REASON: In both states the very emotionalistic propaganda put out by the public employees interests actually frightened people into thinking it would cause tax increases. Have you or the committee thought of ways to counteract that in future campaigns?

FRIEDMAN: I think that the one lesson that has impressed us is the need to start early on the educational campaign. What happened in these cases is that the opponents mounted a last-ditch blitz. And since understanding of the concept is shallow, these misrepresentations could be effective. I believe that the one lesson is, start early and keep hammering at it. Don't wait until just before the election. In the Michigan case, the proponents of the measure brought suit against the League of Women Voters and the Michigan Education Association to enjoin them from distributing false and misleading propaganda. On the Saturday before the election, a judge refused to enjoin them but in his decision stated explicitly that their advertising was false and misleading. The interesting thing about this is that the public relations people stayed up all night trying to communicate that information to every newspaper and other public medium in Michigan, and not a single one picked it up. Now that suggests the problem that you have.

REASON: Another one of your reform proposals has been indexation, as a measure to counteract the effects of inflation. A Los Angeles Times story on the Nobel Prize award stated that you had condemned indexation when you were in Stockholm. Is that correct?

FRIEDMAN: No, I didn't condemn price indexing at all. What I said, in my Nobel lecture, was that indexing will not really eliminate the harm, it will only reduce it. In addition, I said, indexing is even at best an imperfect substitute for stability of the inflation rate. Price indexes are imperfect; they are available only with a lag and generally are applied to contract terms only with a further lag.

REASON: Do you think that indexing has nonetheless been a valuable tool in places like Brazil?

FRIEDMAN: There's no doubt that indexing has been not only valuable but indispensable in a case like Brazil. You know, people talk as if it's an option whether to index or not. Once you get an inflation rate, let's say in double digits for some considerable period of time—more than a year or two—there's no alternative to indexing. No country has experienced inflation at that rate and not gone in for indexing. Actually, the important thing is not the rate of inflation, but the volatility of the rate. If inflation were exactly 15 percent year after year, or exactly 30 percent year after year, there would be no need for indexing. You would make long-term wage contracts and you'd have an interest rate that would account for the steady rate of inflation. Everything would be adjusted. There would be no need for indexing.

The need for indexing arises out of the coincidence of two things: high average rates of inflation and highly variable rates of inflation. Now empirically it is an important phenomenon that those two have gone together. And it's this that leads to the kind of statement I made about high rates of inflation leading to indexing. When you have a very volatile inflation, you have only two choices: either you make very short-term, contracts, so you don't have to bet very much on what the inflation rate is going to be, or else you index. Now, if you get an inflation rate that is really high, let's say the 20 percent per month inflation when I was in Chile two years ago, indexing doesn't do much good, because the defects of the index number, the delays and so on, then become so great that it really is a very imperfect instrument. Indexing is most useful in the intermediate case, when rates of inflation are somewhere between 10 percent and 50 percent a year, and these rates vary, but not all over the lot.

Let me make one more observation about indexing. I think it is important to distinguish between compulsory and voluntary indexing. I'm in favor of compulsory indexing only for governmental contracts. So far as private contracts are concerned, let people do what they want. But there should be no legal discriminations against indexing. On the governmental side, it seems to me it should be part of the rule of law that government make its contracts in real terms. That involves indexing government wages, but also indexing taxes. It means, even more importantly, indexing government borrowing.

REASON: In Capitalism and Freedom when you talked about the money supply you argued that there should be a rule providing for a steady rate of growth of three to five percent per year. Recently, I heard that you now favor a zero rate of money growth. What is your present view?

FRIEDMAN: What you are referring to is an article I wrote some years later on the optimum quantity of money, which said that from a purely abstract point of view, assuming you were starting from a clean slate, the optimum rate of growth in the quantity of money would be lower than that—that the optimum process would be one whereby you had declining prices rather than stable prices. But I also said, you're not starting from a clean slate, you're starting from a situation where there has been deeply embedded in the public at large an attitude that prices will at least be stable if not rising. And as a practical matter, I thought that the three to five percent remained the most desirable compromise between practical feasibility considerations on the one hand and the theoretical argument from principle on the other.

REASON: Wouldn't a rule dealing with the quantity of money have to be in the nature of a Constitutional amendment as opposed to just legislation passed by Congress?

FRIEDMAN: It would be far preferable to have it as a Constitutional amendment. But, again, if you can't get the whole, you take part. I would rather have Congress legislate it than not have it at all. And you know, there has recently been a major change in the formulation of monetary policy. In my opinion, the resolution that was passed a year and a half ago, requiring the Federal Reserve to testify before Congress quarterly and to give its targets for monetary growth over the succeeding year, was the most important change in the formation of monetary policy since the 1930's. In the first place, it had the effect of making the Fed for the first time in its 60-year history set itself targets for as much as a year ahead. Here was an institution which was established to provide for long-range control of the money supply, and to the best of my knowledge, and I have gone through most of the documents, there was never at any prior occasion a time at which it had made any plans for as much as a year ahead. In the second place, and even more important, the new law requires it to specify its targets in terms of the money supply and not in terms of interest rates or anything else. This has reinforced the trend which was already under way for a shift from concern with interest rates to concern with monetary aggregates.

Now the Fed has been extremely subtle and clever in doing its best to minimize the discipline imposed by those requirements. It has done this by various technical devices that I won't go into. Nonetheless, the effect has been to make the whole process more visible. This is inducing Congress to express judgments on whether these are good or bad targets. And I predict that this is gradually going to move in the direction of Congress itself specifying targets, which on the whole, I believe, would be a desirable thing. I am not in favor of an independent Federal Reserve System.

REASON: Won't those targets tend to be heavily politically influenced?

FRIEDMAN: What leads you to believe that they haven't been in the past? I'd rather have them openly and aboveboard politically influenced. The effect of pseudo-independence has been to disperse responsibility. If you talk to the Congress about inflation, then that's something the Federal Reserve is doing. If you talk to the Federal Reserve, they point to Congressmen who are putting up big deficits. I believe the situation will be far healthier if responsibility is concentrated in one place.

REASON: What are your reactions to F.A. Hayek's proposal for denationalization of money?

FRIEDMAN: I am all in favor of his proposals. But I differ sharply from him in my predictions of their consequences. I believe that it is highly desirable to let anybody go into the business of providing money. But I think we have ample empirical and historical evidence that suggests that his hopes would not in fact be realized—that private currencies which offer purchasing power security would not drive out governmental currencies. In the first place, note that you now have a system of competing currencies. There is nothing to prevent anybody from using German marks instead of U.S. dollars, nothing to prevent anybody in Germany from using dollars. So you do really now have competing currencies.

REASON: Except, wouldn't legal tender laws in this country prevent you from making an enforceable contract in, say, Swiss francs, on the same rationale by which gold clause contracts were ruled illegal?

FRIEDMAN: That's very dubious. I think we would all agree that if it had not been for the fact that the enforcement of the gold clause contracts really would have produced perverse equity at that time, they probably would not have been declared unenforceable. At any rate, the argument with respect to gold clauses did not have to do with legal tender laws. It had to do with the Constitutional provision giving Congress the power to coin money and regulate the value thereof and the treatment of gold as if it was money. I don't think there is anything to prevent you and me from entering into a contract now in which the rent I pay to you on the house next year depends, let's say, on the price of timber. All the legal tender law says is that if I have a debt in dollars it can be discharged with these dollars, but the question is, What determines the size of debt in dollars? Suppose you were to offer me the following contract: the subscription price of REASON is $15, equivalent to 35 marks, so a year from now the dollar subscription price of REASON will be 35 times the closing price of marks on the International Money Market in Chicago. That's a dollar subscription price, but it's indexed to the mark. Maybe I'm wrong, but I don't think there's anything illegal about that.

REASON: If that's not illegal with marks, then gold is the only commodity for which it would be illegal.

FRIEDMAN: Well, gold was declared illegal then. I am not at all sure what would happen if a comparable case were brought up now, because it has not been litigated since the monetary role of gold was fundamentally changed. To go back to Hayek's case, the first point is that, empirically, in worlds of competing currencies, the national currency has exerted an enormous attraction because of its familiarity of use. In the second place, it's very hard for me to see how any of his banks would be in a position to offer credible contracts in purchasing power terms. I can see how his banks could offer contracts in terms of other currencies. The U.S. bank could offer contracts linked to the mark, because it could acquire mark assets. But how could a bank offer a credible contract payable at a fixed purchasing power adjusted for purchasing power? What assets does it acquire in order to have its books balance? There are no purchasing power assets. The only way in which I can conceive of there being any is if the U.S. government were to issue purchasing power securities. And then, I can perfectly well see private enterprises arise which would issue purchasing power securities, life insurance companies which would use these as assets; that I can conceive of. But then you're still relying ultimately on the government as the source of the purchasing power asset which is the counterpart to your currency. So, as I say, I will go all the way with Hayek in favor of allowing the maximum degree of freedom for banks to offer anything they and their customers agree upon. But I differ with his predictions that this would turn out to be an effective way of getting a superior currency.

REASON: Let's get back to social change. If you could wipe out or recommend wiping out various government agencies and programs virtually overnight or in a very short period of time, which ones would those be?

FRIEDMAN: There's no doubt that my first choice would be to move to complete international free trade. Wipe out all tariffs, quotas, and restrictions. That would by all means be the most important single thing you could do to promote the free market.

REASON: And what would be some of the government agencies and programs?

FRIEDMAN: Oh, any one. Just name them at random. First on my list, I guess, from the point of view of quantitative importance, not from the point of view of principle, would probably be the ICC and CAB. You know, it's so hard to decide what's first in a race like that. I hesitate, because I now think of the Federal Energy Administration and the Federal Power Commission.

REASON: Let's just take it as a first-year program, where we make a whole lot of changes, not in any particular order, but all within the first year.

FRIEDMAN: Well, as with the tariffs, and this gets back to an earlier point, there is a case for gradualism. I say I would abolish tariffs, but I would not really abolish them overnight. What I would do would be to lower every tariff or to raise every import quota by 20 percent a year. In the case of tariffs, that would eliminate them in five years. In the case of quotas, that would eliminate them as soon as this hypothetical limit exceeded the amount. So, I would hope that by the end of five years we would have complete free trade. I don't think it would be desirable, economically, to do it overnight, because you want to give people a chance to adjust to the new circumstances.

REASON: There's a political point to that too, in terms of having people not turn around and attack free-market ideas for causing too much disruption.

FRIEDMAN: There is a political element, you're quite right. Now, in the case of some of these agencies, the same thing may or may not be true. But in some it would not be. For example, I would abolish the Federal Energy Administration tomorrow, without any gradualism at all. I would eliminate the price controls on oil and natural gas immediately without any transition. Those are not cases for gradualism.

REASON: Would you abolish the FDA and the FCC?

FRIEDMAN: I would certainly abolish the FCC. As you may know, I have long been in favor of auctioning off the radio and TV channels, establishing private property in the right to broadcast signals of certain frequency at certain places over certain hours, and then allowing the market to recombine them. And I would, simultaneously with that, abolish the FCC. The FDA I would also abolish. Although I believe that there is zero case to be made for the FCC, the FDA is a case of judging pros and cons, and there are some arguments to be made in favor of the FDA. But I think experience has amply demonstrated that in practice the negative aspects of it outweigh the positive aspects.

REASON: Looking at the things you have done in your life, and there are a great many things and a great many successes, what are the ones that are the most important to you?

FRIEDMAN: You have to answer that on two different levels. Obviously, on a personal and professional level, the most important things that have happened to me are in my personal life and my scientific activity in the discipline of economics. But if you speak of the public policy activities, I have no doubt that the thing I am proudest of is having played an important role in getting rid of the draft and introducing the volunteer army.

REASON: What are some of the disappointments or regrets that you have?

FRIEDMAN: Those are too numerous to detail. But I suppose that, again, if I looked at it, obviously on the public level, I think the greatest disappointment to myself and many others has been what the Nixon regime turned into. And it has certainly impressed me with the importance of concentrating on public attitudes and opinion rather than on who gets elected.

REASON: When you helped found the Mont Pelerin Society…

FRIEDMAN: Well, I didn't help found it, I was a charter member. That is, I was present at the founding meetings, but that society was founded entirely by Frederich Hayek and Wilhelm Roepke, and they deserve full credit for that.

REASON: When it was founded, were your views about the future more hopeful, or more pessimistic?

FRIEDMAN: In one respect, more hopeful, and in one respect, more pessimistic. I was far more pessimistic, and so were most of us, about the actual course of events over what then seemed the next 25 or 30 years. We seemed to be heading directly into planned economy in every country, an extensively planned economy. If you were to have asked us then to predict the most likely situation in the year 1977, I think most of us would have predicted a far greater extension of government controls even than we have had. On the other hand, on the intellectual level, events have in an important respect been worse. We were hopeful at that time that a new attitude could be developed on the intellectual level toward free enterprise, toward freedom in general and away from collectivism, socialism, planning. And while there has been an enormous increase in the sentiment favorable to this, the really disappointing thing is—well, Germany illustrates it best. West Germany certainly is a monument to what a free market could produce. Yet if you look at intellectual opinion in Germany, it has moved increasingly to the left. And you would have to say that the bulk of the intellectuals there are socialist and collectivist.

REASON: Does the emergence over the last four or five years of a fairly large libertarian movement give you any sign of hope that there may be more intellectual interest in the philosophy of the free market?

FRIEDMAN: It is an indication of that, and I would like to hope that it will continue to develop. But there was a similar surge about 15 years ago. I have comforted myself that the Vietnam war and the draft and the divisions it produced were responsible for aborting that surge and that now we are starting over again. And I hope that view is correct. But the disappointment of the previous surge leads me to say we mustn't count our chickens yet.

REASON: Just as a footnote to your comments on the draft, there have been a number of trial balloons in the last few months about reinstating the draft. From where you sit do you see this as a real threat?

FRIEDMAN: I don't believe so. If we got into a major military confrontation, I fear the draft would be reimposed, but short of that I don't believe that it will be. One of the things that is most impressive is the tyranny of the status quo. It takes a great deal more for us to change the situation than it does to keep it. It took a great deal of pressure and political activity to get rid of the draft, but once you got rid of it, it would also take a great deal of pressure to get it back.

REASON: Have you noticed any tendency of liberals to go back to the roots of the liberal tradition—to 19th-century liberalism? You get people like Governor Brown who are harkening back to decentralization, skepticism of government, and so on. Do you think there's any chance of the good guys recapturing the word "liberal"?

FRIEDMAN: Well, that's a very hard thing to say. I believe there has been among those people who are, in the American lexicon, called liberals a great disappointment and disillusionment about what can be achieved through governmental measures. But in many cases, I do not believe that there has been a real recognition of the source of the failure. Too often the attitude is, Well, we didn't do it right, we've got to do it right next time. I think Governor Brown is not typical of the liberals. He is a maverick, more or less made in his own image. And he is a very complex person who is half astute politician, half intellectual Jesuit. And I don't think you ought to generalize very much from his position. The more interesting thing to me has been the so-called neoconservatives—people who were originally mostly Marxist or socialist or liberal in the American sense, who have moved less in the libertarian direction, in my opinion, than in a traditionalist direction. In the direction of Burke as opposed to the John Stuart Mill of On Liberty. Now in a way that certainly is an improvement. And I have a great deal of sympathy for many of the Burkean views, though my own instincts are much more those of Mill's On Liberty. Yet there has been a misleading surge of hope on the part of libertarians that this represents a real change in the intellectual attitudes and views of a whole generation of people. I don't believe it does. I believe that, as always, real changes in values and philosophies occur primarily among the young. Very few people change their basic philosophy after they are 25 years of age. And if there's a hope for the future, it is really in the greater proportion of the youngsters who are recognizing that liberal measures are a snare and a delusion and have therefore been led to be favorable to a libertarian, free-market view.

REASON: Thank you very much, Dr. Friedman.