A Conversation With Professor David Friedman
Santa Clara Professor of Law David Friedman, a leading anarchist libertarian and son of Nobel Laureate economist Milton Friedman, has been teaching at Santa Clara for nearly a decade. He has authored several books, including Machinery of Freedom, Price Theory, Hidden Order: The Economics of Everyday Life, and, most recently, Law's Order: What Economics Has to Do with Law and Why It Matters. Currently, he teaches Law & Economics, Legal Issues of the 21st Century, and Legal Systems Very Different from Ours. He recently spoke with me about his career, economics, and his latest works.
Q: You have advanced degrees in physics. How did you go from physics to teaching Law and Economics?
While I was getting my doctorate in physics, I was also writing my first book, which was in economics and political philosophy. It was something that interested me. While I was a postdoc in physics at Columbia University, I wrote a piece on population economics for The Population Council. After doing postdoc for a year, I decided that I was having much more fun doing economics than physics, and I was better at it. Somebody offered me a position as a postdoc in something vague, but it really came out of economics – it was a place called the School of Public and Urban Policy at the University of Pennsylvania. And so, I was a postdoc there for two years, where I sort of retrained, and during that time, I wrote my first published economics article. It was on the theory of the size and shape of nations – which was fun – explaining the map of Europe from the fall of the Roman Empire to the present.
Then I spent a year as a lecturer at Penn, and somewhere around that time, I met an economist, James Buchanan, who was at VPI [Virginia Polytechnic Institute] at the time and was sort of the dominant figure there. We discovered that we had rather similar ideas about applying economics outside of the usual areas, to understand things like political systems. He arranged for VPI to invite me to come to their Economics Department, and I ended up as an Assistant Professor of Economics at VPI with no degrees at all in economics.
Then I did economics at VPI, UCLA, Tulane, and various other places. Some of my work, not a lot, but a few of my articles were really economic analysis of law – a couple articles that had to do with things that interested me. So, the law school at the University of Chicago, which had brought out the journal that published those articles – some of the people there thought they’d like to have me visit. So, I came as an Olin fellow, which is faculty fellow research position to the University of Chicago Law School, for a year. Then they offered me a couple of more years, which is when I gave up my position at Tulane – I liked Chicago better, anyway. I ended up spending six or seven or eight years in a one-year position at Chicago. One of my friends was referring to me as the "Life Olin Fellow." It became clear that the people who wanted me there weren’t going to have enough votes to offer me a position, so I began looking for alternatives.
I knew a very interesting economist here called Larry Iannaccone, who is, unfortunately, no longer here – because George Mason stole him from us. That got me interested in Santa Clara. I came and talked to the Law School and the Economics Department. They were interested in me, and I was interested in them, so I came out here.
Q: You teach for the Business School as well?
Yes, I teach one class for the Business School, and in recent years, that’s been something called Econ 5, which is economics for non-economists. At various times I’ve taught a couple of other things, including Law & Econ there, but not in the last few years. I also teach two classes a year for the law school.
Q: Do you enjoy teaching?
I enjoy it. I wouldn’t do it if I didn’t. Santa Clara is a pleasant, friendly place. Chicago is more exciting. But Chicago is more exciting than almost anyplace else.
Q: What current projects are you working on?
My main current project is a new seminar that I started this fall called Legal Systems Very Different From Ours. In the past, I’ve done things on a few unconventional legal systems. I have an old article on Saga period Iceland – the system in Iceland from 930 to roughly 1263. This was an interesting system because it was one in which law was entirely privately enforced. There was no executive arm of government at all. There was a legislature and court system, but you enforced your verdicts yourself. I’ve done a piece on 18th century English criminal law, which was interesting because, although on paper their legal system looked very much like ours, in fact, there were no police and no public prosecutors, and the result was that criminal cases were, in practice, being prosecuted by the victim and not by the state, even though they were on paper as "Rex v. King so and so." I did an article trying to make sense of that. And I’ve done some other things of that sort.
So, I thought it’d be a lot of fun if I set up a course that would force me to absorb a bunch of different legal systems to see if I could make sense of them, and I thought the students would find it fun as well – so far they have. So far this semester we’ve done modern Gypsies, who have their own legal system. We’ve done Imperial China, and Saga Period Iceland. We have just finished the Plains Indians, especially the Cheyenne Indians, where it turns out there’s a classic book co-authored by Karl Llewellyn, a famous legal scholar who also seems to be intrigued by this sort of thing.
We’re just starting medieval Islamic law. I have two students who’ve done papers on pirate law, so we’ll spend a day or two on pirate law. Another student has done a paper on Aztec law, so, with luck, we’ll do a day on Aztec law. It’s really an attempt to say, "Look, all legal systems face more or less the same problems. They solve them in very different ways. Can we stretch our minds to understand how did the Imperial Chinese system work? Why was it like that? Why’d it have those features? How did this one work?" And so forth. That’s been a lot of fun.
My guess is that if I keep doing this seminar – and I hope to do it again next year – in another three or four years, I may have enough stuff to write a book about it. That would be my next book. But, who knows?
I’ve also done other things. I just finished a chapter of someone else’s book that is a defense of privacy. And I did another chapter for someone else’s book, which is called Economics and Evolutionary Psychology and is an attempt to use an evolutionary biology approach to explain behavior that is puzzling in ordinary economic analysis. So, I’m always doing sort of odd things, but the biggest project in the last year or so has been preparing and then teaching this new seminar.
Q: On your website you call yourself the "anarchist-anachronist-economist." What do you mean by that?
By anarchist, I mean anarchist. My first book was called the Machinery of Freedom, and that was more than 30 years ago, and the second edition is still in print. That was basically a libertarian book, about a third of which was about the interesting question of what a society might look like that had private property, and that sort of stuff, but had no government. Whether you could take the idea of privatizing things and take it all the way until there was no government left. I concluded that under some circumstances such a society could work and be attractive. Therefore, it was an interesting thing to explore. So I consider myself as an anarchist – that is, someone who believes in society without government.
One of my hobbies over the years has been a historical recreation group called the Society for Creative Anachronism, which does medieval and Renaissance stuff for fun. If you were to follow my webpage [www.daviddfriedman.com], you could find several hundred medieval recipes with the original version and the worked-out version, as well as articles on things like a thirteenth-century rope bed and how to make one and stuff like that. That’s just been a hobby to do historical stuff and try to figure out how they did things in the past. That’s where the anachronist part comes from.
Q: It’s been said that, by and large, the economics profession fails to educate the public on the basics, while devoting much time and effort to narrower and even esoteric research. Do you agree with this assessment?
I haven’t heard of a lot of open positions teaching elementary economics that can’t get filled. If every economist wanted to teach elementary economics, an awful lot of them wouldn’t get jobs doing it. The amount that people learn, in classes at least, is really a function of what people want.
My strategy has been not mainly classes, though I do teach, but writing books. My last two books and my next book, which is looking for a publisher at the moment, are all books that I think are aimed at the intelligent lay person. That means books that can be and are used as textbooks, are designed so that a smart person who is just curious can pick it up and say, "That’s fun and interesting," and read it. I regard that as a fairly efficient way of spreading economic and other knowledge because I only have to write the book once. I don’t have to teach it over and over again to people.
Q: Is there one particular thing about economics that the general public doesn’t understand that it should?
I think that one of them would be too hard. The classic example of something that everybody thinks they know, which almost everybody has completely wrong, is foreign trade. Most discussions of trade policy that you see publicly take for granted a theoretical structure that’s been obsolete for 200 years. That’s what’s generally been referred to as Absolute Advantage. That’s what’s happening when somebody says, "Look, if India can do everything cheaper than we can, they’ll get all the jobs or they’ll do all the production and we won’t sell anything." That’s a mistake of internal consistency. It’s a case where, unfortunately, the right theory is harder to understand than the wrong theory, and so most people, including most newspaper people are satisfied with the wrong theory.
The correct theory is called the Theory of Comparative Advantage, and it was worked out and published in 1817, so it’s not exactly rocket science. Pretty much anyone who doesn’t understand it is not an economist, but most non-economists don’t understand it. That’s just an example. That’s just another unparticular application of economics.
Another mistake I notice when I’m arguing with people is that people assume that economic explanations are uni-causal. That they are saying, "we do this, because that." The standard example I’m thinking about are discussions like why you have a high rate of birth of children to unmarried mothers. If somebody says, "Look, one of the reasons might be the welfare system," that makes it easier. The person you’re talking to hears that as: "Women have children in order to get welfare." But that’s not what you’re saying at all. What you are really saying is that a woman deciding to have children is balancing a whole bunch of costs and benefits. One of the costs is having to buy stuff for the kid, and one of the benefits is whatever welfare support she can get. From the economist standpoint, we think of people as ultimately rational. So, if the woman adds it all up and the benefits are higher than the costs, including lots of emotional benefits and emotional costs, she has the kid. If they are lower, she doesn’t.
If you change anything in that package, if you make any benefit lower or any cost larger, some women are going to be pushed over the edge in deciding to have a child or not have a child. It isn’t that the economist thinks that poor women have children to get welfare, it’s that the economist thinks that poor women are rational, as he is, and in deciding whether to have children they balance costs and benefits. If something reduces the benefit and increases the cost they have fewer. If something reduces the cost and increases the benefit they have more.
Q: Are government programs too often judged by virtue of their goals and rationales, rather than the results they produce?
Well, sometimes. There was an economist called George Stigler, who made his reputation and earned a Nobel Prize, in part by doing the opposite. Instead of saying this is a program designed to do X, so it must do X, you should ask how can we find out if it’s really doing X, and discovering that very often it wasn’t. He did a bunch of early work in one of those lines of trying to say: did your chances of getting cheated in the stock market go down when we put in the Securities and Exchange Commission, and the answer was apparently ‘no.’
Since then, and Stigler did his work 40 or 50 years ago, a number of economists have tried to say, "How do you measure the effect of policies?" Now, of course in public discussion, you have a phrase like "foreign aid," and that phrase assumes its conclusion. Namely that giving money to foreign governments helps foreigners. Or aid to education, which in fact means subsidy to schooling, might aid or hinder education depending on how it works out. A lot of people are too willing to take the stated intent for the deed, but professional economists quite often make that distinction.
Q: You don’t have a television, does that mean you surf the net quite a bit? And what websites do you most frequently read?
I check CNN.com for the news, a site called Macintouch.com, which has good Macintosh information, and Dealmac.com, which is another good Mac website. I am pretty active on Usenet, which is a set of news groups. I use Google to check if people are responding to things I have said online and Google a lot just for searching for information of all sorts, both for my research and for other purpose, if I am thinking of looking for a new school for my kids, Google is the first place I’d go.
Q: Do you read blogs?
Very rarely. I was informed by a friend of mine a couple of weeks ago that he and I had been attacked in a blog that had gotten a good deal of echoing around the net, and, for a couple of days, I was looking at that stuff, and responding to a little bit of it. Theoretically, I have a blog. I made it and updated six months ago, but not since then. Looks as though it is something you really have to put some effort into, if you are going to do it, and so far I haven’t been inclined to.
Q: Who are your heroes?
That’s an interesting question. David Ricardo is one of them. I like Adam Smith, but, in some ways, Ricardo impresses me more because Ricardo did very hard theoretical stuff without any of the tools you need to do it. It was a beautiful intuitive clear thinking mind. He would be one of my heroes.
Also, John von Neumann, who invented game theory, I find a rather impressive person in a whole lot of different ways, so I suppose that would count as a hero. I’m not sure there is anyone else that comes to mind, although there are a lot of people I admire in different ways.
Contributed by The Advocate
By Grant Turner
Staff Writer