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tv   Lanny Ebenstein Chicagonomics  CSPAN  October 21, 2017 9:47am-10:01am EDT

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detentions is something i might look at in a future book, because i think it definitely needs one. i think the issue of border detentions, there's a number of thingses that are happening, like, right this moment in the u.s. are there other questions? thank you very much for coming out. i'm happy to sign. [applause] >> [inaudible] >> thank you. i'll let her come and take this off. [inaudible conversations] >> booktv is on twitter and facebook, and we want to hear from you. tweet us, twitter.com/booktv. or post a comment op our facebook page,
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facebook.com/booktv. >> now we want to introduce you to professor lanny ebenstein who is the author of this book, "chicago-nomics." when we talk about the chicago school, what are we talking about? >> guest: there's a long history of economics at the university of chicago. and the most significant economists at the university of chicago have been in the free market tradition. so what chicagonomics is about is the history of economics at the university of chicago starting out with some of the early economists such as frank knight and henry simon and then moving on to milton friedman, friedrich hayek who taught for a time at the university of chicago and others. >> host: why is it that they ended up at chicago? >> guest: that's a good question. i think that once there was a nucleus of classical,
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liberal-oriented economists at the university of chicago, it attracted other economists of a similar perspective there, and so it really became the center of classical liberal economics during the 20th century. >> host: when we talk about classical liberal economics, what are we talking about? >> guest: that's a really -- [inaudible] >> guest: sure, that's a really good question. and one of the things that i try to distinguish in the book is between classical liberalism and contemporary libertarianism. and classical liberalism is the idea that there is a place for government in society and a place for a strong private sector, but in the same way that the private sector shouldn't be overencompassing, neither should government with overencompassing. so it's really a position that sees a role for both government and the private sector. by way of comparison, contemporary libertarianism
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tends to the view that there's very little role for government, almost no role for government but only a job, a role for the private sector. is so i think that the difference between the two is the relative emphasis on government and the private sector in classical liberalism versus contemporary libertarianism. >> host: who would you consider to be a contemporary libertarian economist? >> guest: good. the classical liberals would be friedman and hayek in their younger years. but as they age, particularly friedman became more of a contemporary libertarian. when he was younger, he thought there was a significant role for government in tax policy. he favored progressive taxation. he was suspect of government but didn't universally condemn it whereas by the time he was in retirement in san francisco after he left the university of chicago, he'd come around to the
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view virtually that government could do no good. so friedman more or less started out as a classical liberal, he wound up as a contemporary libertarian. hayek, the same is true to an extent. he became somewhat more distrustful of government as he aged but not quite to the same extent as friedman. >> host: what is it about friedrich hayek that he became kind of the high priest of classical liberalism? >> guest: i think that hayek's virtues are several. one is he's an extraordinarily literate philosopher and economist. his readings is in -- reading is in broad areas of economics, politics, history, philosophy, psychology. so it really is informed by wide reading in many disciplines. in fact, he thought that one couldn't be a good economist if one were only an economist. so he advocated that sort of
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multidisciplinary approach. i think that his great contributions are more in the realm of what might be considered philosophical economics rather than pure economic theory. his ideas in areas such as the division of knowledge, that knowledge is divided among all the minds be of humankind and that the purpose of the price and profit system is to overcome the division of knowledge. that's a brilliant contribution and helps to undercut ideas of socialism or complete government controlling or management of an economy. at the same time, hayek -- particularly in his earlier work -- advocated a significant role for government in social welfare and ore functions -- other functions. he really was much more of a classical liberal earlier in his career, in the road to serfdom, legislation and liberty rather than in some of his later work.
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>> host: we hear about frederick hayek being of the austrian school. >> guest: yes. >> host: which is? >> guest: the austrian school is another free market school, and there were a variety of economists in it in the 19th century. carl menger, all significant economists who tended more, with varying degrees of emphasis, toward this classical liberal view of seeing a significant role for government also, a very senate role for the private sector. significant role for the private sector. some of the members of the school very much were of the contemporary libertarian school that government can do almost no good. so it, too, was a leading economic school in these areas of free market economics. >> host: what about on the contemporary level? who's around today that would fit this bill?
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>> guest: well, that's a very good question. and, unfortunately, i feel that there really isn't the same sort of advocacy of the classical liberal view that there was historically, and many of the successors of friedman and hayek at the university of chicago and elsewhere have adopted more of these contemporary libertarian views that there's almost no role for government. and so there isn't sort of that robust advocacy of a limited but still important role for government. i would say that the classical liberal view today is more upheld by economists who would be considered on the left such as paul krugman or joseph stiglitz, emanuel saz. i think they are the true successors of friedman and hayek in the 1950s and that the contemporary libertarians are really a different, a different offshoot. >> host: do you think paul krugman would agree with you?
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>> guest: i think that he very well might. he wrote a very complimentary review of friedman after friedman's death and pointed out that friedman's contributions in economics were very significant and spoke highly of him. larry summers would be another individual who would come to mind. and it's not like in the 1950s, '60s and '70s where economists on the left are advocating social im, that government -- socialism, that government should run the economy. in fact, friedman in the 1950s thought that society should be more equal than it was at that time, and society at that time was far more equal than it is now. friedman would be on the far left at this point in time, his views in the early 1950s. that's a reflection of how much society has changed. so, no, i -- whether they would consider themselves those or not, nonetheless. and i think larry summers would be another example. he's also close to paul
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samuelson, related to both paul samuelson and other leading economists. so i think that the market has won by many respects. the issue isn't as it was during the '50s, '60s and '70s. the issue was should we have the market or should we have command socialism. the market has won that argument. nobody in the world today virtually argues for command socialism. the question is should we have no government at all, or should we have a significant government role, and i think that the odds are definitely on the side of we're going to continue to have a significant government role for some time. >> host: we talked to another economist earlier while we were here at freedom fest, deirdre mccloskey. and she would kind of jokingly cross herself every time she said the sainted adam smith. is he still a sainted person in the economic world? >> guest: adam smith, you're saying? yeah. well, i've actually tone a fair amount of research -- done a
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fair amount of research on smith and some writing op him. again, he was more of the classical liberal view. the time that he wrote, he was in favor of some progressive taxation, he was in favor of emerging welfare state practices, of government. some of his students and others became leading supporters of the french revolution and advocates of early government activity in england, in government including the utilitarians and jeremy bentham, john stewart mill. i would say adam smith was definitely of the classical liberal school rather than the contemporary libertarian school. smith saw that society was not desirable when it was divided between a very few rich and many poor. that's kind of the society that we have now in the united states. that's different than the society that our founders envisioned and that our founders
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advocated. there's no question that if george washington and thomas jefferson and john adams and james madison and thomas paine and benjamin franklin were here today, they'd be advocating more equality in american society. they wouldn't say a society in which the top 1% have 42% of the wealth, on their way to 50%, and the bottom 50% have 1% of wealth, that that was a good society. that wasn't their view at all. they thought that government too often became the servant of the wealthy and the powerful, and that was the opposition to government. it wasn't that in government the poor tended to take away the resources of the rich. the problem in government was that the rich tended to take away the resources of the poor. that's the situation we face in american society today, and that's why true conservatives, true libertarians should work for change in our society. again, a society with a strong private sector guiding the
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economy in its manufacturing of goods but at the same time with a significant public sector providing public goods and insuring that extremes of equality don't -- inequality don't become too great. the founders favored wealth taxation, they favored progressive taxation. so those are the founding american ideals, and those are the ideals we should return to. >> host: is the u.s. economic system in macro basically like that though today? >> guest: absolutely, in terms of we've been more success isful in funneling income and wealth to the very top few in our society than perhaps any society in history. if you look at the average wealth of the top one-tenth, one-one hundredth of 1%, the average wealth has gone up from about $40 million in the late 1970s, early 1980s, to $400 million now. the top 400 people in the united states have more wealth than the
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bottom half of americans. the notion that those 400 people are producing more than the bottom half of americans, that's just false. that's a matter of market failure. it's institutions that are not resulting in rewards that are appropriately being distributed to individuals on the basis of their merits. the market is established by government, and right now we have a system of crony capitalism, casino capitalism that directs resources to the rich and powerful and away from people who are working and producing. .. here is the book called "chicagami

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