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Ep. 8 David R. Henderson on Working in the Reagan Administration, Krugman’s Inflation Memo, and Publicly Challenging the Secretary of Defense

Economist David R. Henderson underwent a personal odyssey in his discovery of free-market economics. David tells Bob the story of his recruitment by Harold Demsetz, and how David ended up at UCLA during its glory days. The conversation turns to David’s time on the Council of Economic Advisors to Ronald Reagan, as well as David’s unusual position as a professor at the Naval Postgraduate School while he was a columnist for






Mentioned in the Episode and Other Links of Interest:

The sound engineer for this episode was Chris Williams. Learn more about his work at

About the author, Robert

Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.


  1. insufil on 12/13/2018 at 7:49 AM

    My first reaction upon looking at David’s photo is “How can a good person be happy?” Then I heard him mention how nice it was to get fat paychecks from Washington DC… ah… yeah…

    To the podcast itself: extremely educational to hear Henderson’s experiences from The Swamp, and how he managed to make himself heard (be respectful and don’t impugn the motives of others).

    ‘Don’t assume bad intentions if stupidity explains the actions’?
    Fine, but..
    ‘Don’t assume good intentions if a pattern of action by obviously smart people evinces a consistent disconnect between stated objectives and observed outcomes.’

    Henderson’s tactic rests on the assumption that all are pulling for the same team. How we think of ourselves is deeply tied to what groups we feel allegiance to. Those groupings can occur across all kinds of lines, whether your clothing and music style, to your religion or economics etc etc. But in the language of politics, the ‘good’ comes from serving ones’ own Nation.

    Now, if the political adversaries are at least still feigning allegiance to your Nation, rational arguments about the drawbacks of their policy proposal can still pull some weight. However they might really be motivated by what serves their employer, or branch of government, or… or… That’s why real libertarians have a tendency to not see us ‘all in the same club’, since we are aware of the real class divide in society – between rulers and ruled…. tax eaters and tax payers…

    Nothing is preventing you from allowing your private assessment of your opponents and your personal planmaking to make use of all available information about them.

    Then you can make most effective use of the political lie that ‘We are all in the same boat and all pulling for the same team.’

    As an Aside: I am happy (exceptionally) that David shared his joy with us about how well Washington DC paid him on the taxpayer dime. Bob graciously skipped the opportunity to comment on that, but I won’t.

    Was David’s work in DC – championing obviously good policies – really positive? Or did it just help give a veneer of respecability to the worst criminal gang in existence?

    • David R. Henderson on 12/14/2018 at 9:00 PM

      You write:
      “Was David’s work in DC – championing obviously good policies – really positive? Or did it just help give a veneer of respecability to the worst criminal gang in existence?”

      My response: I think it was positive on net. Sam Peltzman told me years ago that when he was talking to Ronald Coase after Sam’s time at the CEA, Sam was expressing upset that he hadn’t had much effect. Coase asked him, “Do you think there were ever any government programs with billion dollar annual costs that your opposition slowed by a day?” Sam thought a minute and answered yes. “Then,” said Coase, “You more than paid your lifetime income.”
      I thought through some of the things I helped kill or slowed down and I’m confident that I did the same.

  2. Jim on 12/14/2018 at 3:32 AM

    Very interesting podcast. David was my Micro Econ professor at The Naval Postgraduate School. This was in the 87-88 timeframe so it was before the stuff.

    I can confirm that he was a very good instructor. He would use articles in the Wall Street Journal to demonstrate some economic principle. I really appreciated that approach because it taught me how to read more critically. Without being explicitly political, he probably was the spark that set me on a libertarian path.

    I am glad to see he is doing well.

    • David R. Henderson on 12/14/2018 at 8:55 PM

      Thanks, Jim.

  3. Donald H. Lingerfelt on 12/14/2018 at 7:02 PM

    Bob, Thoroughly enjoyed this interview. I am only upset that now I have three more books to read. One of the best things about this site is that I can listen faster than normal speed. Great idea. I used to do that with one of my tape players and found that it really helped get the information into my brain better than regular speed and took less time to listen to (obviously).

  4. Lysander Spooner on 12/18/2018 at 8:40 AM

    Just bought the Encyclopedia and the decisions book, despite my sympathy for Insufil’s point about the cognitive dissonance of being a libertarian but working for the government mob.

    But the links above open Amazon in the place of I think it would be better to set the links to open a new tab. That way I would keep my Bob Murphy Show tab intact.

    • Robert Murphy on 12/20/2018 at 5:00 AM

      Hmm I understand what you are saying, but I’m not sure how to do that? Is there an HTML tweak that makes it open a different tab?

  5. […] story involving Peltzman. (By the way, I told this story in my podcast with Robert Murphy at about the 30:40 […]

  6. Lysander Spooner on 01/16/2019 at 8:04 AM

    Reading the ‘Making great decisions in life and business’ book. Glad I bought it.

    If Mr Henderson reads these comments, please will he consider writing a version of this book for young teens. Decision making is a key life skill yet it isn’t discussed much in education and teens are notorious for making bad decisions. The existing book is written for adults so it would be great to have a child friendly version with appropriate examples and maybe even work sheets.

    I have a 10 year old and it would be great to have a book ready for him when he is 12 – so Mr Henderson has 2 years. I hope that is long enough ….

    • David R Henderson on 01/17/2019 at 8:12 PM

      Dear Mr. Spooner,
      Thank you.
      Bob Murphy told me about this comment, which is why I’m here.
      Gosh, I think it would be hard for me to write a book for a 12-year old. My gut feel is that I would do it entirely with stories, some of them made up, with a moral of the story at the end. I’ll pass this on to my co-author, Charley Hooper, who is also busy writing a book on the FDA. But we’ll see.

      • Lysander Spooner on 01/18/2019 at 10:06 PM

        Thanks for replying! I look forward to hearing about the finished book in a few years ….

  7. […] Bob’s interview with David R. Henderson, which includes a discussion of Peltzman. […]

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