Olivia: Most people think of Milton Friedman as the high priest of capitalism, the intellectual godfather of Ronald Reagan and Margaret Thatcher. But the man who became a free-market icon started his career… working for Franklin D. Roosevelt's New Deal. Jackson: Wait, seriously? The anti-government guy was on the government payroll, building the very programs he became famous for wanting to dismantle? That doesn't compute. Olivia: It’s the central contradiction that makes him so fascinating. And it’s the perfect entry point for the book we’re diving into today: Milton Friedman: The Last Conservative by Jennifer Burns. Jackson: And this isn't just another take on him. Burns is a Stanford historian, and this is the first full biography to be based on his personal archives. It’s been widely acclaimed for its depth. So we're getting a look behind the curtain that no one's really had before. Olivia: Exactly. We get to see the man, not just the monument. And to understand that New Deal-era Friedman, you have to go back to his roots, to his childhood in Rahway, New Jersey. He wasn't born an ideologue; he was forged by the American experience.

Jackson: Okay, so paint that picture for me. What was his early life like? I’m imagining him as a kid, trading his lunch for his classmates' future earnings or something. Olivia: (Laughs) Not quite, but you’re on the right track with the entrepreneurial spirit. His parents were Jewish immigrants from what is now Ukraine. His father, Sol Friedman, arrived in America at sixteen and built a life from nothing, first in the garment industry, then running a dry goods store. It was the classic immigrant story of grit and ambition. Milton grew up watching his father navigate the world of business, of arbitrage, of finding an edge. Jackson: So the idea of the market as a place of opportunity was baked into his childhood. Olivia: Deeply. And he had that same hustle. The book tells this great story from his time at Rutgers in the late 1920s. He and a friend noticed that all the freshmen needed green ties and white socks for campus events. So what did they do? They bought them wholesale and set up a little business selling them to the incoming class. Jackson: That’s brilliant. A classic case of seeing a need and filling it. Olivia: They didn't stop there. They expanded into selling used textbooks, which infuriated the official campus bookstore. When the bookstore complained, Friedman, ever the clever debater, pulled out a letter from the dean that had authorized their sock-selling business. He argued that the letter's vague wording could be interpreted to cover books as well. And he won. Jackson: I love that. It’s not just about making money; it’s about understanding the rules and using them to your advantage. It’s a preview of the intellectual fighter he would become. Olivia: It is. But then the Great Depression hits, and this optimistic world of opportunity collapses. This is the event that shapes his entire generation of economists. And this is where the story gets complicated. Because of the crisis, the government suddenly needed economists, statisticians, people who could make sense of the chaos. And Friedman was a brilliant student, first at Rutgers, then at the University of Chicago. Jackson: And so he goes to Washington. Olivia: He goes to Washington. He gets a job with the National Resources Committee, a New Deal agency. He's not there to preach laissez-faire; he's there as a technical expert, a statistician. He's working on this massive project called the Study of Consumer Purchases, trying to understand how American families spend their money. He's a pragmatist, a problem-solver, working inside the very government machine he would later spend his life trying to shrink. Jackson: That is just wild. So he's helping build the big government apparatus. What was his thinking at the time? Did he believe in the New Deal's goals? Olivia: The book suggests his motivations were more practical than ideological at that point. He needed a job, and this was an incredible opportunity for a young, ambitious economist to work with unprecedented amounts of data. He was more interested in the statistical challenge than the political philosophy. The fierce ideology would come later, forged in the intellectual battles at the University of Chicago. Jackson: Okay, so when does that shift happen? When does the pragmatic government man become the free-market revolutionary? Olivia: It happens when he returns to the academic world and finds himself in the middle of a war of ideas. A war against an economic theory that had completely taken over the world.

Jackson: And that theory was Keynesianism. You hear that word thrown around a lot, especially today. For those of us who need a refresher, what was the core idea that Friedman was fighting against? Olivia: Think of it this way. Before the 1930s, most economists believed that if the economy got sick, it would eventually heal itself. Then the Great Depression happened, and it didn't heal. It just got worse. The British economist John Maynard Keynes came along and said, "The system is broken. It won't self-correct." He argued that when people are scared, they stop spending, businesses stop investing, and the economy gets stuck in a downward spiral. Jackson: A vicious cycle. Olivia: Exactly. And Keynes's solution was for the government to step in and be the "spender of last resort." The government should run deficits, pump money into the economy through public works or other programs, and jolt the system back to life. After World War II, this idea became gospel. It was the undisputed operating system for the Western world. Jackson: So government spending was the cure-all for any economic illness. Olivia: That was the consensus. And when Friedman got back to the University of Chicago, he found this new group had set up shop there, the Cowles Commission. They were the high priests of Keynesianism, armed with incredibly complex mathematical models designed to fine-tune the economy. They believed they could essentially plan prosperity. Jackson: And Friedman wasn't buying it. Olivia: Not at all. He had this formative experience during the war where he tried to use a similar kind of complex regression analysis to predict the strength of new metal alloys for airplanes. He ran the numbers on a massive early computer, designed two new alloys he called F-1 and F-2, and was sure they'd be revolutionary. Jackson: And were they? Olivia: They were a complete bust. They failed almost instantly. The experience left a deep mark on him. It made him profoundly skeptical of elegant mathematical models that didn't map onto messy reality. He looked at the Cowles Commission and saw his failed alloy experiment on a national scale. He thought they were building beautiful, intricate models of an imaginary world. Jackson: So he needed to fight back. But how do you take on an entire global consensus? You can't just say "you're wrong." You need a better story. Olivia: You need a better story. And he found it by going back to the scene of the crime: the Great Depression. This is where his collaboration with the economist Anna Schwartz becomes one of the most important intellectual partnerships of the 20th century. Together, they embarked on a monumental project: a complete monetary history of the United States. Jackson: They were basically economic detectives, going back through a century of data. Olivia: That's a perfect way to put it. They spent years digging through dusty ledgers and obscure records. And what they found, which they published in their 1963 landmark book, A Monetary History of the United States, was an intellectual bombshell. The Keynesian story was that capitalism itself had failed in the 1930s, proving the need for government management. Jackson: Right, the system had a heart attack. Olivia: Friedman and Schwartz's research showed something completely different. They argued that the Great Depression wasn't a failure of capitalism; it was a colossal, tragic failure of government. Specifically, the Federal Reserve. Jackson: How so? Olivia: In the early 1930s, as banks started to fail, people panicked and pulled their money out. This caused the total amount of money in the economy—the money supply—to shrink dramatically. The Fed, which was created to prevent exactly this kind of crisis, just stood by and watched it happen. In fact, its actions made things worse. The money supply fell by a third. Jackson: So it wasn't a heart attack. It was like the doctors drained a third of the blood out of the patient and then wondered why they died. Olivia: That is the perfect analogy. And it changed everything. It meant the Great Depression wasn't an argument for more government intervention; it was an argument for better, more predictable government action, specifically from the central bank. It put money, and the people who control it, back at the center of the economic story. This was the birth of monetarism, and it was the weapon Friedman would use to dismantle the Keynesian empire. Jackson: Wow. So he rewrites the most traumatic economic event of the century. That's a powerful move. And once you have an idea that powerful, you want to take it out into the world. Olivia: Exactly. He took it from the university to the halls of power, to the pages of Newsweek, to presidential campaigns. But this is where his core principle of freedom, which seemed so clear and powerful in theory, runs into the brutal, messy realities of politics and human society.

Jackson: And this is where we get to the really tough stuff. The parts of his legacy that are, to put it mildly, controversial. Let's start with the most infamous one: Chile. Olivia: Right. It’s 1975. Chile is ruled by the military dictator Augusto Pinochet, who came to power in a brutal 1973 coup that overthrew the democratically elected socialist president, Salvador Allende. The Pinochet regime is known for its death squads, for torture, for political repression. It's a horrifying place. Jackson: And Milton Friedman… goes there for a visit. Olivia: He goes there for a six-day visit. He was invited by a group of Chilean economists who had studied under him at the University of Chicago, nicknamed the "Chicago Boys." They were trying to fix Chile's economy, which was suffering from hyperinflation, running at hundreds of percent per year. They bring in their old professor for advice. Jackson: Okay, but this is a moral minefield. He's meeting with Pinochet himself. How did he justify lending his credibility to a murderous dictator? Olivia: This is the crux of the whole controversy, and Burns's book lays out his reasoning very clearly. Friedman saw himself as a doctor. He argued that an economist's job is to diagnose and treat an economic disease, in this case, hyperinflation. The political nature of the patient—whether a democracy or a dictatorship—was irrelevant to the economic prescription. Jackson: So, a "just following orders" kind of defense, but for economics? "I'm just here to fix the inflation, not the torture problem." Olivia: In a way, yes. He gave a series of lectures and recommended what became known as "shock therapy": drastic cuts to government spending and rapid deregulation to break the back of inflation. His deeper belief was that economic freedom was a necessary precondition for political freedom. He thought that by fixing the market, you would eventually create the conditions for democracy to return. Jackson: That sounds… incredibly naive. Or willfully blind. What was the result? Did it work? Olivia: Economically, the shock therapy did eventually bring down inflation, but at a tremendous social cost. Unemployment soared, inequality skyrocketed, and the poor suffered immensely in the short run. Politically, Pinochet stayed in power for another 15 years. The idea that free markets would quickly lead to political freedom did not pan out. Jackson: And the criticism must have been intense. Olivia: It was, and it followed him for the rest of his life. Protesters would show up at his lectures. He was accused of being an accomplice to fascism. Critics, like the exiled Chilean official Orlando Letelier, wrote that in Chile, "economic freedom for small privileged groups" and "repression for the majorities" were two sides of the same coin. Jackson: It forces a really uncomfortable question about the responsibility of intellectuals. Can you ever separate your ideas from the context in which they're used? Olivia: You can't. And the book shows that the Chile experience did change Friedman. Later in his life, he amended his view. He began to argue that while economic freedom was important, political freedom was also necessary to maintain economic freedom in the long run. It was a subtle but significant shift, an acknowledgment that the relationship between the two was more complex than he had initially thought. Jackson: This same tension seems to show up in his views on civil rights in the U.S., which the book also critiques. He opposed the 1964 Civil Rights Act. How did he square that with a belief in freedom? Olivia: He used the same abstract logic. He believed that the law, by forcing business owners to serve people they might not want to, was a violation of their "freedom of association." He thought the free market itself would solve racism, because a business owner who refused to serve Black customers or hire Black employees would be at a competitive disadvantage. Jackson: That feels like a massive failure to understand the depth and systemic nature of American racism. The market wasn't going to magically fix Jim Crow. Olivia: It's a view that many, including the book's author, find deeply troubling. It highlights the limits of a purely economic lens on complex social problems. His commitment to the abstract principle of economic freedom led him to a position that, in practice, aligned with segregationists. It's the same pattern as Chile: a pure idea colliding with a messy, painful reality.

Jackson: So we have this incredible arc. A pragmatic government employee becomes an intellectual revolutionary who rewrites economic history, and then becomes this world-famous, but deeply controversial, public figure whose ideas have these very real, very painful consequences. Olivia: Exactly. And that brings us back to the book's title, The Last Conservative. Jennifer Burns argues that's what he was. He represented a specific, mid-20th-century brand of conservatism built on a tripod of pure economic liberty, anti-communism, and a belief in global cooperation and free trade. Jackson: A brand of conservatism that feels almost extinct today. Olivia: Completely. In the 21st century, that coalition has shattered. The political movement he helped build now often champions protectionism over free trade and is deeply skeptical of immigration, two things Friedman championed. His legacy isn't a simple story of good or bad, right or wrong. It's a set of powerful, world-changing ideas whose complex and often contradictory consequences we are all still living with. Jackson: It makes you wonder, at what point does a pure idea, whether it's freedom or equality, have to bend to the messy reality of human lives? It's a question Friedman wrestled with, and one we're still debating today. Olivia: It's the central question his life forces us to confront. A powerful and unsettling legacy. Jackson: A huge thank you to everyone for joining us on this deep dive. We'd love to hear your thoughts. Does Friedman's story change how you think about the role of government or the meaning of freedom? Let us know. Olivia: This is Aibrary, signing off.