WEBVTT NOTE Hazlitt and Keynes 1 00:00:00.000 --> 00:00:04.520 I want to talk today about two men, one of them also a great financial supporter of the 2 00:00:04.520 --> 00:00:13.520 Mises Institute as well as a great role model, if I can use that cliché, and a great public 3 00:00:13.520 --> 00:00:18.320 intellectual for freedom, Henry Hazlitt, and then another man, John Maynard Keynes, who 4 00:00:18.320 --> 00:00:24.040 I guess we could call our greatest opponent, not only in his eye, if not personally, although 5 00:00:24.040 --> 00:00:31.040 personally if he was still alive, but in his ideas, in his writings, and in his followers. 6 00:00:31.680 --> 00:00:38.680 Keynes was born in 1883 and died in 1946. Haslett was born in 1894, 11 years after Keynes 7 00:00:40.960 --> 00:00:47.960 and lived much longer, dying in 1993. Their lives and loyalties are a study in contrast, 8 00:00:47.960 --> 00:00:54.840 Contrast, and mostly of choices born of internal conviction, in Hazlitt's case, or of course 9 00:00:54.840 --> 00:01:01.640 a lack thereof in Keynes' case. Keynes became the most famous economist of the 20th century 10 00:01:01.640 --> 00:01:07.600 and the guru crank whose work has inspired thousands of failed economic experiments and 11 00:01:07.600 --> 00:01:14.260 of course continues to inspire them today. He is this fengali-like figure who implausibly 12 00:01:14.260 --> 00:01:21.260 should convince the world that saving is bad, that inflation cures unemployment, that investment 13 00:01:23.220 --> 00:01:30.160 can and should be socialized, and consumers are fools whose interests should be dismissed, 14 00:01:30.160 --> 00:01:35.380 and capital can remain non-scarce by driving interest rates to zero, thereby turning the 15 00:01:35.380 --> 00:01:41.080 hard work of many hundreds of years by economists on its head. 16 00:01:41.080 --> 00:01:51.080 He means, at every privilege in life, and all the power and influence that an intellectual can have, and he used it irresponsibly in service to the state. 17 00:01:51.080 --> 00:02:02.080 Hazlitt was very nearly his foil. He did not come from privilege, did not enjoy a prestigious educational pedigree, did not know any of the right people. 18 00:02:02.080 --> 00:02:09.080 He came from nowhere, and he worked his way up through sheer force of intellectual labor and moral determination. 19 00:02:09.080 --> 00:02:15.080 Hazlitt eventually became one of the great public voices for the free market in the 20th century, 20 00:02:15.080 --> 00:02:23.080 writing in every popular venue he could, applying his enormous talents as a thinker and writer to defending and explaining free markets, 21 00:02:23.080 --> 00:02:30.080 showing how the classical economic wisdom was true and how it was vastly improved by the Austrians. 22 00:02:30.080 --> 00:02:33.080 And our sound money is essential for freedom. 23 00:02:33.080 --> 00:02:38.720 A market signaling works to achieve economic coordination, and our government policy is 24 00:02:38.720 --> 00:02:44.200 always and everywhere the enemy of freedom and prosperity. 25 00:02:44.200 --> 00:02:48.680 Hazlitt's great book, Economics of a Lesson Written in the Year that Keynes Died, boils 26 00:02:48.680 --> 00:02:54.120 down all of economics to a single principle and applies it across the board to all of 27 00:02:54.120 --> 00:02:56.280 the policies of government. 28 00:02:56.280 --> 00:03:01.960 It is crystal clear in its language, designed to be read by anyone in an effort to achieve 29 00:03:01.960 --> 00:03:06.960 Mises' dream of bringing economic wisdom to every citizen. 30 00:03:06.960 --> 00:03:12.720 Keynes' major work, The General Theory, has been read by very few, mainly because it is 31 00:03:12.720 --> 00:03:17.520 so incomprehensible as to be nearly written in code. 32 00:03:17.520 --> 00:03:19.680 But then it wasn't designed for everyone. 33 00:03:19.680 --> 00:03:25.080 It was written for the elites by a member of the most elite class of intellectuals on 34 00:03:25.080 --> 00:03:26.680 the planet. 35 00:03:26.680 --> 00:03:30.880 Even more effectively, it was written with an eye to impressing the elites in the one 36 00:03:30.880 --> 00:03:40.880 In one way, they can be impressed. A book so convoluted and contradictory that it calls forth not comprehension, but ascent through intimidation. 37 00:03:40.880 --> 00:03:49.880 Its success is a remarkable story of the bamboozlement of an entire profession, followed by the misleading of the entire world. 38 00:03:49.880 --> 00:03:59.880 If there are still believers in what Murray Rothbard called the wig theory of history, the idea that history is one long progress upwards towards the truth, 39 00:03:59.880 --> 00:04:09.320 If I had to bet on which book will have greater longevity, however, I would go with Hazlitt. 40 00:04:09.320 --> 00:04:15.200 The same is true of Hazlitt's great legacy. He died without much fanfare. In fact, his 41 00:04:15.200 --> 00:04:20.280 days of fame were far behind him, arguably reaching their height when he was an editorial 42 00:04:20.280 --> 00:04:25.560 writer for the New York Times. When he was told that he needed to write in defense of 43 00:04:25.560 --> 00:04:28.760 of Keynes' Screwy Plan for Bretton Woods. 44 00:04:28.760 --> 00:04:31.800 He balked and walked away. 45 00:04:31.800 --> 00:04:36.120 13 years later, writing as a columnist for Newsweek, 46 00:04:36.120 --> 00:04:38.840 Haslett came out with a line-by-line refutation 47 00:04:38.840 --> 00:04:41.120 of Keynes' general theory. 48 00:04:41.120 --> 00:04:45.120 It's arguably his great work, the one begging to be written. 49 00:04:45.120 --> 00:04:48.400 He alone had seen the need, and it continues to reach us today 50 00:04:48.400 --> 00:04:50.840 and serves as something of a manual 51 00:04:50.840 --> 00:04:53.040 for the errors of government. 52 00:04:53.040 --> 00:04:57.740 Well, Hazlitt and Keynes began their education with an intense interest in literature and 53 00:04:57.740 --> 00:05:03.920 philosophy, but eventually settled in economics. Both were in a position to make a choice of 54 00:05:03.920 --> 00:05:09.320 theoretical paradigms, given the intellectual and political content of their times. Both 55 00:05:09.320 --> 00:05:14.100 were major public intellectuals. Both considered themselves to be liberals in the way that 56 00:05:14.100 --> 00:05:19.200 term was used before the New Deal, meaning a general disposition towards human rights, 57 00:05:19.200 --> 00:05:22.360 Free Trade and Open Societies. 58 00:05:22.360 --> 00:05:27.000 In this spirit, Keynes wrote an opposition to the Treaty of Versailles that imposed savage 59 00:05:27.000 --> 00:05:30.280 terms on Germany after the war. 60 00:05:30.280 --> 00:05:33.800 He favored free trade and generally allied himself with that cause. 61 00:05:33.800 --> 00:05:39.820 Sadly, that tendency that derived from the old world's love of liberty was incompatible 62 00:05:39.820 --> 00:05:45.000 with his life's agenda, which he believed to be his birthright. 63 00:05:45.000 --> 00:05:50.600 That agenda was to rule the world through intellectual means by virtue of connections 64 00:05:50.600 --> 00:05:52.400 to the powerful. 65 00:05:52.400 --> 00:05:57.760 That essential humility that was at the core of the economics profession of the 19th century, 66 00:05:57.760 --> 00:06:02.800 the humility to embrace laissez-faire as a principle, was completely missing from his 67 00:06:02.800 --> 00:06:04.160 mind. 68 00:06:04.160 --> 00:06:08.920 Keynes was born as a member of the ruling elite in Britain. 69 00:06:08.920 --> 00:06:13.680 His father and his father's good friend Alfred Marshall were two very powerful figures at 70 00:06:13.680 --> 00:06:15.680 at Cambridge University. 71 00:06:15.680 --> 00:06:18.000 They shepherded him to the top colleges 72 00:06:18.000 --> 00:06:19.960 and introduced him to the right people 73 00:06:19.960 --> 00:06:22.400 and the time came when he was inducted 74 00:06:22.400 --> 00:06:25.800 into the super secret, super elite secret society 75 00:06:25.800 --> 00:06:29.600 of certain top intellectuals in the English speaking world. 76 00:06:29.600 --> 00:06:32.600 That group was called the apostles. 77 00:06:32.600 --> 00:06:35.480 And this was the group that would come to shape his ideas 78 00:06:35.480 --> 00:06:37.440 and his approach to life. 79 00:06:37.440 --> 00:06:39.080 The group had been formed in 1820 80 00:06:39.080 --> 00:06:42.320 and included top members of the British ruling class. 81 00:06:42.320 --> 00:06:48.620 They met every Saturday evening and spent most of the rest of their time during the week with other members. 82 00:06:48.620 --> 00:06:50.820 Membership was for life. 83 00:06:50.820 --> 00:06:56.720 It is impossible to overestimate the extraordinary intellectual arrogance of this group. 84 00:06:56.720 --> 00:07:03.920 They would refer to themselves as the only thing that is fully real in a Kantian sense in the world. 85 00:07:03.920 --> 00:07:08.720 The rest of the world and the rest of the human race was an illusion. 86 00:07:08.720 --> 00:07:13.520 Keynes was an undergraduate when he wrote to a fellow apostle member as follows, 87 00:07:13.520 --> 00:07:19.600 Is it monomania, this colossal moral superiority that we feel? 88 00:07:19.600 --> 00:07:23.560 I get the feeling that most of the rest of the world, outside the apostles, 89 00:07:23.560 --> 00:07:25.660 never see anything at all. 90 00:07:25.660 --> 00:07:27.600 They're too stupid. 91 00:07:27.600 --> 00:07:30.800 In the time of Keynes, according to those who have studied this carefully, 92 00:07:30.800 --> 00:07:37.080 the apostles was dominated by an ethos that included two general traits. 93 00:07:37.080 --> 00:07:41.360 The bond that held the world together and would push it forward was the friendship and 94 00:07:41.360 --> 00:07:46.440 love that the apostles had for each other, and that there were no other moral principles 95 00:07:46.440 --> 00:07:48.320 that really mattered. 96 00:07:48.320 --> 00:07:55.760 And second, an intense disdain for religion and for bourgeois values, institutions, ideas 97 00:07:55.760 --> 00:07:56.760 and tastes. 98 00:07:56.760 --> 00:08:02.960 It was in this period that Keynes met G.E. Moore, a very powerful philosopher at Trinity 99 00:08:02.960 --> 00:08:05.720 College and an apostle's member. 100 00:08:05.720 --> 00:08:10.600 This magnum opus was called Principia Ethica, written in 1903. 101 00:08:10.600 --> 00:08:14.280 It was a philosopher's attack on all fixed principles 102 00:08:14.280 --> 00:08:17.480 and a defense of what he called immoralism. 103 00:08:17.480 --> 00:08:20.760 This was the book that changed Keynes's life completely. 104 00:08:20.760 --> 00:08:23.760 He called it exciting, exhilarating, 105 00:08:23.760 --> 00:08:25.880 the beginning of a new renaissance, 106 00:08:25.880 --> 00:08:29.200 the opening of a new heaven on earth. 107 00:08:29.200 --> 00:08:30.680 It was this book that led him to believe 108 00:08:30.680 --> 00:08:33.960 that it was possible to completely reject religion, 109 00:08:33.960 --> 00:08:37.520 Morality, Conventions, and All Traditions. 110 00:08:37.520 --> 00:08:40.240 It might even be considered the kind of prototype 111 00:08:40.240 --> 00:08:42.240 of his own later work. 112 00:08:42.240 --> 00:08:45.640 These same values migrated to the famed Bloomsbury Group 113 00:08:45.640 --> 00:08:48.640 that Keynes joined after graduation. 114 00:08:48.640 --> 00:08:51.360 As many historians of the period have said, 115 00:08:51.360 --> 00:08:54.680 it was very influential in cultural and intellectual life 116 00:08:54.680 --> 00:08:58.120 in England, especially in the 1910s and 1920s. 117 00:08:59.040 --> 00:09:02.520 The emphasis here was not on science, but on art 118 00:09:02.520 --> 00:09:05.480 and the overthrow of Victorian standards 119 00:09:05.480 --> 00:09:08.240 in order to embrace the avant-garde. 120 00:09:08.240 --> 00:09:11.400 Keynes' contribution to the effort was mainly financial, 121 00:09:11.400 --> 00:09:13.640 for he had made a fortune as a speculator 122 00:09:13.640 --> 00:09:17.000 and spent lavishly on Bloomsbury causes. 123 00:09:17.000 --> 00:09:19.380 He also provided the members with contacts 124 00:09:19.380 --> 00:09:21.720 in the world of finance and economics. 125 00:09:22.600 --> 00:09:25.080 In discussing how immoralism and the rejection 126 00:09:25.080 --> 00:09:27.320 of all principles applied to economics, 127 00:09:27.320 --> 00:09:31.680 Rothbard draws attention to Keynes' position on free trade. 128 00:09:31.680 --> 00:09:49.680 As a good Marshalian, he was a proponent during most of his early life of free trade. Then suddenly in 1931, that changed with a paper that loudly and aggressively called for protectionism and economic nationalism, a total reversal of what he had previously said his whole life. 129 00:09:49.680 --> 00:10:00.680 The press ridiculed him for his shift. That never troubled Keynes. For as an apostle and a champion of immoralism, he contended that there was no contradiction worthy of notice. 130 00:10:00.680 --> 00:10:11.680 He believed that he could take any position, whenever he wanted, on any issue, and he could live his life unhinged from any standard or rule. 131 00:10:11.680 --> 00:10:19.680 He was always ready to change his opinion, given the new makeup of the political constellation, and he never felt any burden to explain himself. 132 00:10:19.680 --> 00:10:27.680 It was precisely because of this tendency to change his point of view on a dime that critics became tired of dealing with him. 133 00:10:27.680 --> 00:10:33.680 Hayek spent a great deal of time refuting them on various subjects, particularly Keynes' book on money, 134 00:10:33.680 --> 00:10:39.680 only to have Keynes dismiss the criticisms on grounds that he no longer held those views. 135 00:10:39.680 --> 00:10:44.680 He praised FDR and urged all governments to follow the New Deal, 136 00:10:44.680 --> 00:10:50.680 but were impressed on the details of programs like the disastrous National Industrial Recovery Act. 137 00:10:50.680 --> 00:10:54.680 He'd back away and grant, well, it was probably ill conceived. 138 00:10:54.680 --> 00:10:58.400 His opportunism was palpable and infuriating. 139 00:10:58.400 --> 00:11:01.160 As the depression deepened, he began to see himself 140 00:11:01.160 --> 00:11:05.160 as the philosopher king of the world economics establishment, 141 00:11:05.160 --> 00:11:08.640 advising governments all over on their politics. 142 00:11:08.640 --> 00:11:10.680 His main target was the gold standard, 143 00:11:10.680 --> 00:11:13.720 which he regarded as a relic of a bygone era, 144 00:11:13.720 --> 00:11:16.160 the ultimate symbol of Victorianism, 145 00:11:16.160 --> 00:11:19.360 the monetary embodiment of morality and standards, 146 00:11:19.360 --> 00:11:21.480 a restraint on the ability of government 147 00:11:21.480 --> 00:11:22.920 to tinker with the economy, 148 00:11:22.920 --> 00:11:28.760 and therefore from his point of view, the ultimate enemy of everything he hoped to accomplish. 149 00:11:28.760 --> 00:11:32.920 The General Theory made its appearance in 1936. 150 00:11:32.920 --> 00:11:35.240 Let me introduce that book with a question. 151 00:11:35.240 --> 00:11:40.440 What would we call a person who believed that government policy can completely eliminate 152 00:11:40.440 --> 00:11:42.760 the scarcity of capital? 153 00:11:42.760 --> 00:11:48.840 Most economists in history, even most today perhaps, would call this person a nut. 154 00:11:48.840 --> 00:11:54.400 The whole economic problem that economic theory grapples with concerns the invincible reality 155 00:11:54.400 --> 00:11:59.400 of the scarcity of capital. The idea that we can somehow concoct a system in which there 156 00:11:59.400 --> 00:12:04.920 would be no scarcity amounts to the belief that government can create a permanent utopia 157 00:12:04.920 --> 00:12:10.160 with a push of a few buttons. It's no different from a belief in some kind of magical land 158 00:12:10.160 --> 00:12:16.800 of fantasy. It represents a fundamental failure to grapple with reality. And yet this is what 159 00:12:16.800 --> 00:12:22.800 This is what precisely Keynes hoped to achieve through his policy prescriptions in The General Theory. 160 00:12:22.800 --> 00:12:28.800 His idea was to create this land of universal happiness by one, driving the interest rate to zero, 161 00:12:28.800 --> 00:12:34.800 and two, achieving his sought after, quote, euthanasia of the rentier class, unquote, close quote. 162 00:12:34.800 --> 00:12:39.800 That is, the killing off of people who live off interest, and thereby, three, 163 00:12:39.800 --> 00:12:44.800 eliminating what he considered to be the most exploitive aspect of capitalism, 164 00:12:44.800 --> 00:12:49.680 that which rewards investors for their sacrifices. 165 00:12:49.680 --> 00:12:55.280 The ghastly situation we find ourselves in today, where savings earns virtually nothing 166 00:12:55.280 --> 00:13:01.040 and the Fed holds rates down to zero, seems to be a fulfillment of the worst of the Keynesian 167 00:13:01.040 --> 00:13:06.760 dream. As for the contributions of the book to theory, Rothbard writes, quote, the general 168 00:13:06.760 --> 00:13:12.620 theory was not truly revolutionary at all, but merely old and unperfuted mercantilist 169 00:13:12.620 --> 00:13:18.700 and inflationist fallacies dressed up in shiny new garb, replete with newly constructed and 170 00:13:18.700 --> 00:13:24.740 largely incomprehensible jargon. What bad economic policies lacked was a prestigious 171 00:13:24.740 --> 00:13:29.920 economist to come to their defense. And this is precisely the role that the general theory 172 00:13:29.920 --> 00:13:35.620 played. Governments all over the world welcomed and celebrated this book. As for the success 173 00:13:35.620 --> 00:13:40.900 of the book within economics itself, there are important sociological reasons to consider. 174 00:13:40.900 --> 00:13:47.400 Keynes' language was nearly impenetrable. He coined new terms on nearly every page. 175 00:13:47.400 --> 00:13:52.900 Rather than being a disadvantage, this is often an advantage in a profession that has lost its way. 176 00:13:52.900 --> 00:13:58.900 And as Murray Rothbard pointed out, of course, the source of thousands and thousands of PhD dissertations, too, 177 00:13:58.900 --> 00:14:00.900 explaining what Keynes really meant. 178 00:14:00.900 --> 00:14:05.900 Keynes set out to divide the world into two broad classes of people, 179 00:14:05.900 --> 00:14:09.900 stupid consumers whose behavior is determined by external force 180 00:14:09.900 --> 00:14:13.900 and savers who are a drag on economic growth. 181 00:14:13.900 --> 00:14:17.900 The job of government policy, he thought, is to goad the first group 182 00:14:17.900 --> 00:14:21.900 into a different set of behaviors and pretty much destroy the second group. 183 00:14:21.900 --> 00:14:25.900 Everything else in the Keynesian system follows from those two general 184 00:14:25.900 --> 00:14:29.900 propositions. This accounts for his hatred of the gold standard, 185 00:14:29.900 --> 00:14:33.900 of traditional capitalism, and of the price system that functions as a 186 00:14:33.900 --> 00:14:37.900 signaling mechanism for the production and allocation of resources. 187 00:14:37.900 --> 00:14:45.900 It also accounts for why Keynes was one of the world's most passionate advocates of the fascist impulse in the 1930s. 188 00:14:45.900 --> 00:14:53.900 He celebrated the, quote, enterprising spirit, quote, unquote, of Sir Oswald Mosley, the founder of the British Fascist Party. 189 00:14:53.900 --> 00:14:57.900 He joined the New York Times in praising the central planning of Mussolini. 190 00:14:57.900 --> 00:15:05.900 Thus, it was not a surprise when Keynes wrote a forward to the German edition of his book in 1936, which was welcomed by the Nazis. 191 00:15:05.900 --> 00:15:12.900 and in that forward he said that his system is more quote more easily adapted 192 00:15:12.900 --> 00:15:17.900 to the conditions of a totalitarian state than to one of free competition. 193 00:15:17.900 --> 00:15:23.900 Nor should it be surprising that Keynes also dabbled in anti-Semitism praising even openly Jewish tirades 194 00:15:23.900 --> 00:15:26.900 of the ex-prime minister Lord George. 195 00:15:26.900 --> 00:15:31.900 A puzzling aspect of academia is how a sector that lives on its reputation 196 00:15:31.900 --> 00:15:37.900 for Objectivity and Love of Science can be so easily bamboozled by charlatans. 197 00:15:37.900 --> 00:15:40.900 And the success of this book is a great case in point. 198 00:15:40.900 --> 00:15:45.900 Most economists over the age of 50 dismissed the book, but the younger ones regarded it, many of them, 199 00:15:45.900 --> 00:15:52.900 as a kind of religious revelation that came to them with a huge career advantage over their elders. 200 00:15:52.900 --> 00:15:55.900 Keynes's personal prestige had a lot to do with that. 201 00:15:55.900 --> 00:15:57.900 As Rothbard wrote, quote, 202 00:15:57.900 --> 00:16:02.580 It's safe to say that if Keynes had been an obscure economics teacher at a small midwestern 203 00:16:02.580 --> 00:16:07.800 American college, his work, in the unlikely event that he'd found a publisher, would have 204 00:16:07.800 --> 00:16:14.020 been totally ignored. But coming from a Cambridge professor and student of Marshall and a member 205 00:16:14.020 --> 00:16:21.020 of the upper classes, Keynes had huge advantages. The Keynesian magnetism was so powerful that 206 00:16:21.560 --> 00:16:26.220 it even drew in most of the former followers of F. A. Hayek, who by then was teaching in 207 00:16:26.220 --> 00:16:32.440 of London. Most tragic of all was the conversion of Lord Robbins to the Keynesian cause. Robbins 208 00:16:32.440 --> 00:16:36.580 had written a great book on the Great Depression, the Mises Institute publishes this book by 209 00:16:36.580 --> 00:16:42.580 the way, and it's entirely written in a Massessian spirit. But after having worked with Keynes 210 00:16:42.580 --> 00:16:48.540 on economic planning, Robbins fell victim to what was apparently his extraordinary personal 211 00:16:48.540 --> 00:16:55.540 charisma, later writing of Keynes' quote, unearthly brilliance and quote, godlike personal 212 00:16:55.540 --> 00:17:01.540 He wrote that Keynes, quote, must be one of the most remarkable men who has ever lived. 213 00:17:01.540 --> 00:17:11.540 Robbins ended up repudiating his best work and only came back to it somewhat right at the end of his life. 214 00:17:11.540 --> 00:17:20.540 Hayek wrote many times that Keynes before his death was on the verge of repudiating what by then had become of the Keynesian system. 215 00:17:20.540 --> 00:17:24.540 This is based on Keynes' positive review of Hayek's road to serfdom, 216 00:17:24.540 --> 00:17:28.540 as well as Keynes' own private words to Hayek himself. 217 00:17:28.540 --> 00:17:33.540 In analyzing the evidence, however, Rothbard concludes that no such conversion was coming, but rather, 218 00:17:33.540 --> 00:17:38.540 this was just Keynes doing the Keynesian thing, shifting, moving, dodging, 219 00:17:38.540 --> 00:17:42.540 changing with no attachment to standards or principles or morality. 220 00:17:42.540 --> 00:17:46.540 He would believe anything and say anything and do anything to advance himself 221 00:17:46.540 --> 00:17:50.540 and put his class of technicians in charge of the world economy. 222 00:17:50.540 --> 00:18:03.540 It is remarkable that after a lifetime of writing, that his views would still be so difficult to pin down that even Hayek could believe, however briefly, that there was a modicum of sincerity in this man's words or actions. 223 00:18:03.540 --> 00:18:09.540 Comparing the life and work of Henry Hazlitt is like comparing night and day. 224 00:18:09.540 --> 00:18:16.540 Hazlitt never held an academic position. He had no family connections, was never formally schooled in economics, 225 00:18:16.540 --> 00:18:30.540 But he was an extremely hard worker who read passionately and extensively, making an extraordinary career for himself, given that he was forced to drop out of grammar school in order to support his widowed mother. 226 00:18:30.540 --> 00:18:38.540 He read in all his spare time, Mill, Aristotle, Nietzsche, Gibbon, and anyone else he could get his hands on. 227 00:18:38.540 --> 00:18:43.540 He kept extensive diaries of all he read and his thoughts on them. 228 00:18:43.540 --> 00:18:53.540 In all his studies, he presumed an old-fashioned view of his goal, to discover what is true as a means to guiding his life and his judgments. 229 00:18:53.540 --> 00:19:02.540 All the while, he was also working. His first series of jobs followed in quick succession, sometimes lasting only a few days. 230 00:19:02.540 --> 00:19:12.540 He later would say that this was only possible because there were no hindrances on hiring or firing employees, so it was very easy for him to get new jobs when he was fired. 231 00:19:12.540 --> 00:19:28.540 But each time he had a new job, he would learn a little bit more, become more valuable, be kept longer, and eventually his salaries grew, no minimum wage in those days of course, $5 a week, $8 a week, $10, $12 a week. 232 00:19:28.540 --> 00:19:38.540 Finally, he worked his way up to become a reporter at the Wall Street Journal. He was paid 75 cents per story, and he soon became invaluable. 233 00:19:38.540 --> 00:19:44.540 It was in 1910 that he received his first real exposure to economics in Philip Wickstede's great book, 234 00:19:44.540 --> 00:19:46.540 The Common Sense of Political Economy. 235 00:19:46.540 --> 00:19:52.540 This is the book that firmly embedded him in the classical and marginalist perspective on economic issues 236 00:19:52.540 --> 00:19:55.540 and prevented him from ever falling away, he said. 237 00:19:55.540 --> 00:20:04.540 He was also trying his skills as a writer, and sure enough, he managed to get his first book published by a major publisher at the age of 22. 238 00:20:04.540 --> 00:20:07.540 It was called Thinking as a Science. 239 00:20:07.540 --> 00:20:18.540 This is also a book kept in print by the Mises Institute and is certainly one of the most inspirational and instructive books ever written on self-education and the obligation to learn. 240 00:20:18.540 --> 00:20:22.540 He opens this book, again written in 22, as follows. 241 00:20:22.540 --> 00:20:27.540 Every man knows there are evils in the world which need setting right. 242 00:20:27.540 --> 00:20:31.540 Every man has pretty definite ideas as to what those evils are. 243 00:20:31.540 --> 00:20:36.540 But to men, one in particular stands out vividly. 244 00:20:36.540 --> 00:20:49.540 To some, in fact, this stands out with such startling vividness that they lose sight of other evils or look upon them as the natural consequences of their own evil in chief. 245 00:20:49.540 --> 00:20:55.540 I, too, have a pet evil to which, in more passionate moments, I am apt to attribute all the others. 246 00:20:55.540 --> 00:20:58.540 This evil is the neglect of thinking. 247 00:20:58.540 --> 00:21:05.540 When I say thinking, I mean real thinking, independent thinking, hard thinking. 248 00:21:05.540 --> 00:21:14.540 Here we have the tone and approach of a man with integrity, intellectual integrity, a man who was determined to find his way to what is true. 249 00:21:14.540 --> 00:21:23.540 The entire book reads this way. I'm particularly struck by his analysis on why some people attach themselves to error and will not let go. 250 00:21:23.540 --> 00:21:28.540 He might as well have been discussing the seduction of the economics profession by Keynes. 251 00:21:28.540 --> 00:21:32.540 In this passage, again from a book he wrote at the age of 22, 252 00:21:32.540 --> 00:21:34.060 He's speaking of the prejudice 253 00:21:34.060 --> 00:21:36.460 that in particular affects intellectuals, 254 00:21:36.460 --> 00:21:38.860 their propensity to imitate the ideas 255 00:21:38.860 --> 00:21:41.460 that seem fashionable at the moment. 256 00:21:41.460 --> 00:21:44.620 Writes Haslett, we agree with others, 257 00:21:44.620 --> 00:21:47.940 we adopt the same opinions as other people around us 258 00:21:47.940 --> 00:21:50.780 because we fear to disagree. 259 00:21:50.780 --> 00:21:52.820 We fear to differ with them in thought 260 00:21:52.820 --> 00:21:55.980 in the same way we fear to differ with them in dress. 261 00:21:55.980 --> 00:21:58.540 In fact, this parallel between style and thought 262 00:21:58.540 --> 00:22:02.140 and style and clothing seems to hold throughout. 263 00:22:02.140 --> 00:22:06.060 Just as we fear to look different from the people around us because we will be considered 264 00:22:06.060 --> 00:22:13.100 freakish, so we fear to think differently because we know we were looked upon as weird. 265 00:22:13.100 --> 00:22:18.980 He recalls a conversation he had with an intellectual, which he raised a point made by Herbert Spencer. 266 00:22:18.980 --> 00:22:24.340 The person recoiled and said, well surely Spencer's ideas have all been superseded. 267 00:22:24.340 --> 00:22:28.380 Hazlitt discovered this person had never read Spencer, had absolutely no idea of anything 268 00:22:28.380 --> 00:22:44.380 and what Dean Spencer had actually said about anything clearly has, at least initially, like most non-academics, had a tendency to have higher expectations of the integrity of the intellectual classes than they merited then or now. 269 00:22:44.380 --> 00:22:59.880 Nevertheless, he condemns the tendency to absorb prevailing ideas as uncritically as completely foolhardy, as a path towards making life meaningless, writes Hazlitt. 270 00:22:59.880 --> 00:23:04.780 I am willing to wager that most of these same people, now so dithyrambic in their praise 271 00:23:04.780 --> 00:23:11.380 of James, Bergson, Eugen, and Russell, all will 25 years hence be ashamed to mention 272 00:23:11.380 --> 00:23:17.280 those names, and will be devoting themselves solely to post-neo-futurism or whatever else 273 00:23:17.280 --> 00:23:21.780 happens to be the passing fatosophy of the moment. 274 00:23:21.780 --> 00:23:25.580 He goes on to speak of what might be the credo of his life. 275 00:23:25.580 --> 00:23:29.860 If this is the most prevalent form of prejudice, it is also the most difficult to get rid 276 00:23:29.860 --> 00:23:37.240 of. It requires moral courage. It requires the rarest kind of moral courage. It requires 277 00:23:37.240 --> 00:23:42.340 just as much courage for a man to state and defend an idea opposed to the one in fashion 278 00:23:42.340 --> 00:23:49.120 as it would be for a man to dress in hot clothes on a sweltering day or for a young society 279 00:23:49.120 --> 00:23:54.820 woman to attend a smart affair in one of last year's gowns. The man who possesses this moral 280 00:23:54.820 --> 00:24:00.340 is blessed beyond kings, for he must pay the fearful price, but he must pay the 281 00:24:00.340 --> 00:24:05.340 fearful price of ridicule or contempt. He later went on to work and went back to 282 00:24:05.340 --> 00:24:09.380 work at the journal and resumed his reading, tracing footnotes to ever 283 00:24:09.380 --> 00:24:13.820 greater books. He followed the footnotes in Benjamin Anderson's book, All the Way 284 00:24:13.820 --> 00:24:18.140 to Discover Mises's Theory of Money and Credit. He had fallen in love with 285 00:24:18.140 --> 00:24:23.020 economics in the same way most of us did. He loved its elegance, its explanatory 286 00:24:23.020 --> 00:24:29.220 Power, its implicit love of liberty and its central role in the rise of civilization. 287 00:24:29.220 --> 00:24:31.380 But it was not his only love. 288 00:24:31.380 --> 00:24:36.940 He read widely in literature as well and found a market for his talents in this area. 289 00:24:36.940 --> 00:24:41.380 He moved from newspaper to newspaper until he eventually took a position as the literary 290 00:24:41.380 --> 00:24:46.700 editor of The Nation, which was then known as a liberal but not a status publication. 291 00:24:46.700 --> 00:24:50.180 It was far more important in those days than today. 292 00:24:50.180 --> 00:24:53.060 So this was a very high prestige job for him. 293 00:24:53.060 --> 00:24:55.020 And he took it at a time that would turn out 294 00:24:55.020 --> 00:24:57.740 to be a major turning point in our nation's history 295 00:24:57.740 --> 00:24:59.900 and also in his own life. 296 00:24:59.900 --> 00:25:02.700 In 1932, after FDR's election, 297 00:25:02.700 --> 00:25:04.020 The Weekly would start to weigh in 298 00:25:04.020 --> 00:25:07.440 on various aspects of New Deal policy. 299 00:25:07.440 --> 00:25:09.880 It was Hazlitt's internal constitution, 300 00:25:09.880 --> 00:25:12.900 that belief in truth that led him to write in these pages 301 00:25:12.900 --> 00:25:15.320 what he believed about FDR's policy. 302 00:25:15.320 --> 00:25:18.560 He wrote about the real cause of the Great Depression, 303 00:25:18.560 --> 00:25:24.640 which he saw not as a failure of capitalism, but as connections, but as a correction from 304 00:25:24.640 --> 00:25:30.140 the credit-fueled bubble. The nation itself was not yet firmly entrenched as a propaganda 305 00:25:30.140 --> 00:25:36.280 paper for economic central planners, and so the editors let Hazlitt have his say. He warned 306 00:25:36.280 --> 00:25:40.820 about the results of protectionism, price controls, subsidies, and economic planning 307 00:25:40.820 --> 00:25:45.800 in general. Not only would these methods not work, he said, to dig us out of the depression, 308 00:25:45.800 --> 00:25:51.800 that they were contrary to the spirit of human liberty that liberals embraced as a matter of their creed. 309 00:25:51.800 --> 00:25:58.800 In saying these things, he was saying pretty much what any economist would have said a few decades earlier. 310 00:25:58.800 --> 00:26:04.800 But he also knew, Phil Well, that he was going against, very much going against, the existing zeitgeist. 311 00:26:04.800 --> 00:26:07.800 Of course, that Keynes himself was helping to draft. 312 00:26:07.800 --> 00:26:12.800 Sure enough, Hazlitt won the debate, but lost his job at the nation. 313 00:26:12.800 --> 00:26:16.900 This was the first of many such events in his life, and it was something to which he 314 00:26:16.900 --> 00:26:22.040 would become accustomed. He had worked too hard for too long, believed too much in the 315 00:26:22.040 --> 00:26:27.480 power of truth to turn away from it. He had established a dictum early in his life that 316 00:26:27.480 --> 00:26:32.160 he would not go along with an opinion simply because powerful and influential people around 317 00:26:32.160 --> 00:26:38.320 him held to it. He would have courage now and always. It was not only his writing ability 318 00:26:38.320 --> 00:26:44.220 that attracted H.L. Mencken to him, and Mencken named Hazlitt as his successor at the American 319 00:26:44.220 --> 00:26:49.200 Mercury where he was for three years until he moved on to become the lead editorialist 320 00:26:49.200 --> 00:26:54.800 for the New York Times. Probably the last time the Times would write about anything. 321 00:26:54.800 --> 00:27:01.800 In 1946, this job came to an end in the dispute over the Bretton Woods monetary agreement. 322 00:27:01.800 --> 00:27:07.720 Hazlitt was relentless in attacking its fallacies and in predicting its doom. The publisher 323 00:27:07.720 --> 00:27:12.280 Hazlitt came to him and explained the paper could not continue to oppose what everyone 324 00:27:12.280 --> 00:27:14.440 else seemed to support. 325 00:27:14.440 --> 00:27:19.620 Hazlitt knew this routine rather well and so he left without bitterness or acrimony 326 00:27:19.620 --> 00:27:24.080 and proceeded to write what would become the best-selling economics book of all time. 327 00:27:24.080 --> 00:27:30.480 In these years too he had met Ludwig von Mises, who had come to our shores in 1940. 328 00:27:30.480 --> 00:27:36.880 Hazlitt recognized in Mises one of those men with moral courage, a man who as Henry Hazlitt 329 00:27:36.880 --> 00:27:42.380 put it in his early book as, quote, blessed beyond kings, for his willingness to stick 330 00:27:42.380 --> 00:27:48.040 up for truth even at great personal cost. He used his position at the Times to alert 331 00:27:48.040 --> 00:27:53.880 readers to Mises' books and ideas. He helped Mises find a publisher for English translations 332 00:27:53.880 --> 00:28:00.360 of his books and became a promoter and champion of the Misesian world view. As we look back 333 00:28:00.360 --> 00:28:05.600 on it, it seems very clear that Mises' own life, at least in the United States, would 334 00:28:05.600 --> 00:28:08.600 would have been very different without the help of Hazlitt. 335 00:28:08.600 --> 00:28:12.940 In some ways, Henry Hazlitt became a one-man Mises Institute. 336 00:28:12.940 --> 00:28:16.060 But let's return to Hazlitt's succession of jobs. 337 00:28:16.060 --> 00:28:17.600 He went from The Times to Newsweek, 338 00:28:17.600 --> 00:28:21.560 where his Business Tides column educated a full generation 339 00:28:21.560 --> 00:28:24.360 or two in economic theory and policy, including me, 340 00:28:24.360 --> 00:28:25.840 I might add. 341 00:28:25.840 --> 00:28:28.840 These were remarkable columns, beautifully written, 342 00:28:28.840 --> 00:28:31.240 spot on every single week. 343 00:28:31.240 --> 00:28:32.960 And I'm pleased to announce the Mises Institute 344 00:28:32.960 --> 00:28:35.120 is going to be publishing the complete collection 345 00:28:35.120 --> 00:28:40.840 of these columns in a book that I hope will help reestablish Hazlitt's position as one 346 00:28:40.840 --> 00:28:51.080 of the key intellectuals of the 20th century. 347 00:28:51.080 --> 00:28:55.560 But now it was time for Hazlitt to take down the man whose ideas had dogged him for decades, 348 00:28:55.560 --> 00:28:57.840 John Maynard Keynes himself. 349 00:28:57.840 --> 00:29:02.520 Hazlitt was the first and still the only economist who has ever taken the general theory, taken 350 00:29:02.520 --> 00:29:05.100 it on in a line-by-line analysis. 351 00:29:05.100 --> 00:29:09.600 He did this in a book published in 1959 called, also available in the bookstore, by the way, 352 00:29:09.600 --> 00:29:13.080 all these books, The Failure of the New Economics. 353 00:29:13.080 --> 00:29:17.160 He writes in the introduction that he was warned not to write this book because Keynes's 354 00:29:17.160 --> 00:29:20.540 ideas were already unfashionable. 355 00:29:20.540 --> 00:29:26.320 But he decided to go ahead, based on an insight of Santayana, that ideas aren't usually abandoned 356 00:29:26.320 --> 00:29:30.480 because they have been refuted, but because they have become unfashionable. 357 00:29:30.480 --> 00:29:36.080 But as so far as Keynes could tell, there was no stepping away from Keynesian fashionableness. 358 00:29:36.080 --> 00:29:42.400 And note, too, this was written fully 52 years ago. Keynes is fashionable all over again. 359 00:29:42.400 --> 00:29:47.560 What Haslett discovered was that the book was much worse than he had imagined. He found 360 00:29:47.560 --> 00:29:53.880 no ideas in the book that were both true and new. He patiently goes through the book, explains 361 00:29:53.880 --> 00:29:59.480 what he means, taking Keynes apart piece by piece through 450 pages of thrilling analysis 362 00:29:59.480 --> 00:30:04.840 and Pros, finishing up with a great concluding chapter that summarizes all the errors in 363 00:30:04.840 --> 00:30:09.400 the book. I've not mentioned many of Hazlitt's other great books, including his two books 364 00:30:09.400 --> 00:30:15.440 on monetary economics. On this matter, he was the perfect foil for Keynes. Whereas Keynes 365 00:30:15.440 --> 00:30:20.760 believed that the most important single step to destroying laissez-faire was to demolish 366 00:30:20.760 --> 00:30:26.240 the gold standard, Hazlitt believed that there would never be a lasting regime of freedom 367 00:30:26.240 --> 00:30:30.000 were all restored without addressing the monetary problem. 368 00:30:30.000 --> 00:30:35.760 What Keynes wanted to destroy, Hazlitt wanted to restore and firmly entrench as part of 369 00:30:35.760 --> 00:30:37.680 the market order. 370 00:30:37.680 --> 00:30:42.080 They both agreed on the centrality of the issue in achieving their dreams, and in this 371 00:30:42.080 --> 00:30:44.160 they were both right. 372 00:30:44.160 --> 00:30:48.520 But nowhere each ended up at the end of their lives. 373 00:30:48.520 --> 00:30:54.360 Keynes died famous and rich and beloved, heralded by one and all for his brilliance. 374 00:30:54.360 --> 00:30:58.800 He was never asked to do anything courageous. He was never asked to make a sacrifice for 375 00:30:58.800 --> 00:31:04.000 what he believed in. It would never have occurred to him to do so, for the very idea of a moral 376 00:31:04.000 --> 00:31:09.800 commitment or an intellectual responsibility was either unknown to him or totally rejected 377 00:31:09.800 --> 00:31:10.800 by him. 378 00:31:10.800 --> 00:31:17.000 Hazlitt, in contrast, died at what was arguably a low point in his career. He had climbed 379 00:31:17.000 --> 00:31:21.920 to the top but then had been pushed down time and time again, eventually writing for and 380 00:31:21.920 --> 00:31:27.920 by working with a small and largely embattled group of defenders of free enterprise. 381 00:31:27.920 --> 00:31:33.920 We have these two approaches contrasting images of the role of the public intellectual. 382 00:31:33.920 --> 00:31:38.920 Is this role to defend freedom of the individual and to promote the development of civilization? 383 00:31:38.920 --> 00:31:43.920 Or is the goal to enrich oneself, to get as close to power as possible, 384 00:31:43.920 --> 00:31:47.920 to become as famous and influential as one can be? 385 00:31:47.920 --> 00:31:52.400 It all comes down to one's moral commitments and personal integrity. 386 00:31:52.400 --> 00:31:59.720 In the end, this is the core issue, one arguably more important than even economic theory. 387 00:31:59.720 --> 00:32:05.600 Hazlitt made his choice and left us with great words of wisdom on the duty to support freedom. 388 00:32:05.600 --> 00:32:09.800 And he said this on the occasion of his 70th birthday party. 389 00:32:09.800 --> 00:32:16.720 Said Hazlitt, we have a duty to speak even more clearly and courageously, to work hard, 390 00:32:16.720 --> 00:32:20.200 to keep fighting this battle while the strength is still in us. 391 00:32:20.200 --> 00:32:21.840 Even those of us who have reached 392 00:32:21.840 --> 00:32:23.880 and passed our 70th birthdays 393 00:32:23.880 --> 00:32:25.960 cannot afford to rest on our oars 394 00:32:25.960 --> 00:32:27.760 and spend the rest of our lives 395 00:32:27.760 --> 00:32:30.360 dozing in the Florida sun. 396 00:32:30.360 --> 00:32:32.240 The times call for courage. 397 00:32:32.240 --> 00:32:34.480 The times call for hard work. 398 00:32:34.480 --> 00:32:36.000 But if the demands are high, 399 00:32:36.000 --> 00:32:39.080 it is because the stakes are even higher. 400 00:32:39.080 --> 00:32:42.240 They're nothing less than the future of liberty, 401 00:32:42.240 --> 00:32:44.680 which means the future of civilization. 402 00:32:45.520 --> 00:32:47.520 Thank you very much.