Friedman centenary

By Lorenzo

Today (Tuesday 31st) is Milton Friedman’s centenary.  It seems appropriate to link to some Milton Friedman quotes here and here.  Various bloggers have offered their comments, including Bryan Caplan’s ode, Tyler Cowen notes how much he is still needed, Lars Christensen writes him a letter, and David Glasner continues his campaign against the Wall St Journal editorial pages. [UPDATE A black Marxist student remembers being impressed that, in 1960, Friedman had a black secretary.]

David Glasner’s tribute is an excellent summary:

Milton Friedman, by almost anyone’s reckoning, was one of the great figures of twentieth century economics. And I say this as someone who is very far from being an uncritical admirer of Friedman. But he was brilliant, industrious, had a superb understanding of microeconomic theory, and could apply microeconomic theory very creatively to derive interesting and testable implications of the theory to inform his historical and empirical studies in a broad range of topics. He put his exceptional skills as an economist, polemicist, and debater to effective use as an advocate for his conception of the classical liberal ideals of limited government, free trade, and personal liberty, achieving astonishing success as a popularizer of libertarian doctrines, becoming a familiar and sought-after television figure, a best-selling author, and an adviser first to Barry Goldwater, then to Richard Nixon (until Nixon treacherously imposed wage-and-price controls in 1971), and, most famously, to Ronald Reagan. The arc of his influence was closely correlated with the success of those three politicians.

Milton Friedman would cheerfully advise anyone about how to improve the economic condition of their people including (infamously) Gen. Pinochet and (often ignored) Communist China. (Pinochet, of course, relinquished power after losing a referendum; don’t see the Beijing regime doing that any time soon.)

Milton Friedman was an opponent of conscription [the highlight of his famous exchange with Gen. Westmoreland is here], in favour of drug legalisation, an innovative thinker on welfare (proposing the negative income tax and education vouchers) and a critic of the IMF and the World Bank. (In particular, he did not approve of the way the IMF protected banks and other institutions who lent to developing countries at the expense of their taxpayers.) As this paper (pdf) points out, Milton Friedman’s comments on Japanese monetary policy make it pretty clear he would not have been impressed by our current “hard money” monetary-contraction inflation hawks.

There is also a “fantasy Friedman” on whom various falsities are projected–such as that he supported IMF policy, that the Euro followed his proscriptions (he was deeply sceptical about its prospects) or that he only worried about inflation. The last is hilariously untrue, since he co-wrote the classic analysis of the dire effects of monetary contraction deflation, A Monetary History of the United States.

One of his great virtues was his ability to be clear, with a gift for vivid explanatory metaphors. An OpEd on “the Fed’s thermostat” (pdf) is a good example.  He once proposed “the mother-in-law test”. Any economic idea he could not explain to his mother-in-law over a cup of tea was probably wrong.  If you couldn’t be clear to interested lay folk, what was the point?

He thought Keynes was a great economist and was a friend of Friederich Hayek (though apparently they ended up agreeing not to discuss matters monetary, as their disagreements were too strong).

His son is also very independent minded, which speaks well of his parenting skills. David Friedman (who has no degree in economics and is one of the prominent early figures in the SCA) wrote one of the first pieces I ever read which applied economic reasoning to a non-“economic” subject–why C18th armies had bright complicated uniforms. (To make it clear if a soldier broke ranks, since the inaccurate muskets of the period worked best if fired at once in clumped groups, which also made the soldiers better targets.)

Paul Krugman [who respects Friedman] once wrote of something Milton Friedman had written that it was “typical Milton; too simple but mostly correct”.  To be “mostly correct” seemed to me then, and does now, as high praise.

Milton Friedman July 31, 1912 – November 16, 2006. Requiescat in pace.

4 Comments

  1. D L White
    Posted August 2, 2012 at 7:49 pm | Permalink

    Lorenzo.
    Milton Friedman may well be deserving of the accolades in the terms described, however his powerful influence has unfortunately brought the world back to the edge of economic collapse; a larger dose of the 1930’s depression when it took the imposition of controls as promoted by Keynes, the Glass Stegall Act in America and the Marshall plan following the war to maintain a period of growth and stability.

    It may not be the theory of market correction which is at fault but historically, every time free market capitalism has been let loose it has resulted in economic implosion. The removal of controls simply allows those who have the capital with which to exploit the associated freedom to channel more wealth in their own direction.

    The globalisation of free market capitalism has seen the growth of international corparate institutions which are now so large, wealthy and thus powerful that government’s now hold them in such esteem that they form trade associations to assist them.

    International corparate enterprise is at the heart of unsustainable exploitation of cheap manpower and resources on a global scale. This has dis-enfranchised the workers in many of the so called rich market countries, in turn reducing the wealth production and the spending power of the people within those countries. There is a serious lack of economic sense in this imbalance.

    Keynes knew that as fine as the theory of free market capitalism might be the reality is that the free part does not actualy work; something that Friedman chose to overlook.

    There are some fine economic minds in the world, why is it that so few recognise a simple truth when its staring them in the face?
    Den71

  2. Posted August 3, 2012 at 4:07 am | Permalink

    [email protected] I suggest you read my other posts on how Central Banks have visited the Great Recession upon us. Just as they did the Great Depression, as Friedman and his co-author Anna Schwarz demonstrated in their classic A Monetary History of the United States. (Link above.) My post Broken by the fix is a good place to start.

    So no, our present travails are not Milton’s fault. Not only was he deeply sceptical about the euro, but he saw monetary contraction as the proximate causes of severe economic downturns and, once again, he is correct.

  3. Posted August 3, 2012 at 4:16 am | Permalink

    [email protected] An excellent summary of the failures of the ECB.

  4. D L White
    Posted August 3, 2012 at 5:42 pm | Permalink

    Lorenzo
    When I first suspected that there were smelly things in the wood pile I did not realize that pandoras box was also buried there. So clearly the depth of my knowledge was scant. I took your suggestion and read your post on “Broken by the fix”, however, unfortunately much of the detail you present in this post is beyond the scope of my comprehension at this time. I will pursue the matter further though thanks to your suggestion.
    Cheers Denis

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*