Milton Friedman, 1912-2006
From the desk of The Brussels Journal on Thu, 2006-11-16 23:49
A quote from Milton Friedman in Reason, June 1995
All battles are perpetual. You go back in the literature of economics, and you’ll find the same kind of silly statements 100 years ago, 200 years ago. And you’ll find the same sensible statements the other way. […] There’s no short cut. There’s no way in which you’re going to end the discussion, because new generations arise; every group has the same crazy ideas. I get a great many letters from people who think that the way to solve budget problems and fiscal problems is to simply print money and pay off the debt. And there’s almost no way of making those people realize just what a bunch of nonsense that is. I’m inclined to think that there’s no field so rife with cranks as currency and money, but I’m sure there are other fields that are just as bad. I’m just ignorant of them.
Friedman's legacy (2)
Submitted by marcfrans on Mon, 2006-11-20 17:59.
2) While you could justifiably question some of the broader philosophical implications of Friedman's advocacy of free markets and individualism for human welfare in general, I think you are on weaker ground questioning his "economic" theories. The main point is that economic theories are based on presuppositions which sometimes do correspond to existing economic conditions or circumstances, and at other times do not. Friedman's "economic" theories have advanced knowledge in the sense that they largely came to supplant Keynesian economics because the latter could no longer explain well what was happening in the real world, and Friedman could.
-- Specifically, Friedman has been able to explain the determining role of the factor "money supply" in explaining the events of the pre-war 'Great Depression', something that had not been clearly understood before.
-- He also explained why the industrial world ended up with 'stagflation' (combination of low growth/stagnation and high inflation) in the 1970's, and why orthodox Keynesian macroeconomic policies did no longer appear 'to work'. In other words, he was able to explain why the famous 'Phillips curve', i.e. the presumed trade-off between inflation and unemployment, could be wrong or invalid.
There are a number of economic theories of his which have withstood the test of time. This is evidenced by the fact that sensible governments today use mainly monetary policy (and not Keynesian fiscal policies) for economic stabilisation purposes. It does not mean that his economic theories will be for 'all time'. Most likely they will be not. But they certainly were for 'our time'.
Friedman's large legacy
Submitted by marcfrans on Mon, 2006-11-20 17:52.
May I suggest that you read the article by Robert J. Samuelson in today's Washington Post (.com) on "Friedman's large legacy".
1) The distinction you made, between three "areas with their own specific laws", is overdrawn. These are not watertight compartments with "separate" laws. Freedom obviously is a matter of degree, and the fact that people "depend on each other" is not antithetical to freedom. It is very difficult to argue that more freedom (not absolute superficial freedom) has not helped tremendously in expanding material wealth under a wide variety of circumstances. At least if you are willing to be guided by empirical observations. China and India are the best examples of that in the world of the past quarter century. Their policies of economic liberalisation (away from statism) have done the most ever in terms of reducing poverty and expanding material wealth in human history. Also, the postwar trade liberalisation in Europe under the EEC (the EU in an earlier and more sensible stage) had enabled rapid economic growth in Europe for about 3 decades (until statist ideological impulses have put a stop to it in more recent decades).
Friedmans economic theories are impossible
Submitted by nohvig on Mon, 2006-11-20 01:44.
The French Revolutions parole in or after the time of Reason was Liberty, Equality and Fraternity. This parole still rings like music in most peoples ears in Europe and elsewhere to this day. On this background it is somewhat clear why Friedmans economic theories will not work any better than the socialists theories.
In a modern western society, freed of religion in politics, there are three areas that operate after their own specific laws:
The spiritual/cultural sphere= (liberty/freedom), the judicial/democratic law sphere= (equality) and the and the economic/associative sphere= (fratenity/brotherliness).
Freedom is the goal in the spiritual/cultural sphere, equality through democracy is the goal of judicial sphere and brotherliness is the goal of the economic/associative sphere.
The problem with Friedman and others of the same school seek freedom in the economic sphere. This is an illusion because nobody in a modern society works for himself. We are all dependent of each other work for the things that surround us. You can´t have freedom in the economic sphere without creating anarchy.
The problem with the socialists is that they seek equality in the economic sphere.
That´s why neither socialistic or Friedmans theories will work, because they don´t respect these laws.
One of the greatest thinkers of our time.
Submitted by McMad on Fri, 2006-11-17 00:02.
Everyone should read at least some of his work.
A Great Man has passed away.