A MILTON FRIEDMAN Sampler

Discussion Open Forum
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MILTON FRIEDMAN passed away recently. His obit inspired a few coments that I thought were interesting. I freely confess to not having an in-depth knowledge of Economics. No problem. I know the name of a few of them and have read some of them.
I came across this and think its a good familiarizer with why Mr. Friedman won his Noble Prize.
A quick sampling of his writings:
opinionjournal.com/extra/?id=110009267]Friedman’s Sampler
A selection of writings from The Wall Street Journal.
BY MILTON FRIEDMAN
Saturday, November 18, 2006 12:01 a.m. EST
(Editor’s note: Emily Parker and Joseph Rago compiled this collection of Milton Friedman’s writings from The Wall Street Journal. Friedman died Thursday at 94.)

Enjoy.

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In case you missed these tidbits…

MILTON FRIEDMAN won the John Bates Clark Medal, awarded to an outstanding American economist under the age of 40, in 1951. Many consider it harder to win than a Nobel Prize. One of the measures of his greatness is that when he got it, he still had not done any of the work for which he would become most famous. [color=blue][impressive][/color]
[…]
And what of his other crusades? His proposal of a volunteer military force, once rejected as impractical, is now so deeply ingrained in American culture that politicians who proposed bringing back the draft for the war in Iraq were dismissed as crackpots or worse.[color=blue][impressive][/color]
[…]
Even outside his homeland, his ideas continue to make inroads. He was pilloried for briefly advising the Pinochet regime in Chile, where his students, “the Chicago boys”, ran economic policy. Thirty years later that oppressive government is gone but his free-market reforms have made Chile the economic star of Latin America. The World Bank and IMF continue to push for stable financial systems and market-based reforms around the world.[color=red][much less than impressive, depending on your view of Chicago School economics, the World Bank and IMF][/color]
[…]
But despite Mr Friedman’s work, thickets of regulation thrive in most countries, particularly his homeland. Nor has he succeeded in trimming back the state, which is still growing in many places, including America. Ironically, another legacy may be to blame: income-tax withholding, which he helped to invent during the second world war. The fact that the tax is deducted from most peoples’ pay before it reaches their pockets is perhaps the main reason why the state has been able to grow so large. Mr Friedman deeply regretted this contribution to economic science—but like his other inventions, it will long outlive him.[color=blue][ironic][/color][/quote]

A Staunch LibertarianAs a libertarian, Mr. Friedman advocated legalizing drugs and generally opposed public education and the state’s power to license doctors, car drivers and others. He was criticized for those views, but he stood by them, arguing that prohibiting, regulating or licensing human behavior either does not work or creates inefficient bureaucracies. [color=red][unlicensed doctors and drivers? yikes! No public education? How elitist would that become?][/color]

Mr. Friedman insisted that unimpeded private competition produced better results than government systems. “Try talking French with someone who studied it in public school,” he argued, “then with a Berlitz graduate.” [color=green][I’d bet on the kid who does language immersion in public school, but otherwise, yeah, ok.][/color]

Once, when accused of going overboard in his antistatism, he said, “In every generation, there’s got to be somebody who goes the whole way, and that’s why I believe as I do.” [color=red][hmmm… what might he mean by that?][/color][/quote]

Now, if you balance the positive, practical accomplishments color=blue[/color], against the ideological positions their potential consequences, color=red[/color] you ought to have a better idea why one might wish that his ideology be buried with him.

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I’m guessing 1975 was before you were born.

Mr. Friedman has no response to your desires to bury(suppress) his contributions to the field of Economics.

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[quote=“Jaboney”]In case you missed these tidbits…

MILTON FRIEDMAN won the John Bates Clark Medal, awarded to an outstanding American economist under the age of 40, in 1951. Many consider it harder to win than a Nobel Prize. One of the measures of his greatness is that when he got it, he still had not done any of the work for which he would become most famous. [color=blue][impressive][/color]
[…]
And what of his other crusades? His proposal of a volunteer military force, once rejected as impractical, is now so deeply ingrained in American culture that politicians who proposed bringing back the draft for the war in Iraq were dismissed as crackpots or worse.[color=blue][impressive][/color]
[…]
Even outside his homeland, his ideas continue to make inroads. He was pilloried for briefly advising the Pinochet regime in Chile, where his students, “the Chicago boys”, ran economic policy. Thirty years later that oppressive government is gone but his free-market reforms have made Chile the economic star of Latin America. The World Bank and IMF continue to push for stable financial systems and market-based reforms around the world.[color=red][much less than impressive, depending on your view of Chicago School economics, the World Bank and IMF][/color]
[…]
But despite Mr Friedman’s work, thickets of regulation thrive in most countries, particularly his homeland. Nor has he succeeded in trimming back the state, which is still growing in many places, including America. Ironically, another legacy may be to blame: income-tax withholding, which he helped to invent during the second world war. The fact that the tax is deducted from most peoples’ pay before it reaches their pockets is perhaps the main reason why the state has been able to grow so large. Mr Friedman deeply regretted this contribution to economic science—but like his other inventions, it will long outlive him.[color=blue][ironic][/color][/quote]

A Staunch LibertarianAs a libertarian, Mr. Friedman advocated legalizing drugs and generally opposed public education and the state’s power to license doctors, car drivers and others. He was criticized for those views, but he stood by them, arguing that prohibiting, regulating or licensing human behavior either does not work or creates inefficient bureaucracies. [color=red][unlicensed doctors and drivers? yikes! No public education? How elitist would that become?][/color]

Mr. Friedman insisted that unimpeded private competition produced better results than government systems. “Try talking French with someone who studied it in public school,” he argued, “then with a Berlitz graduate.” [color=green][I’d bet on the kid who does language immersion in public school, but otherwise, yeah, ok.][/color]

Once, when accused of going overboard in his antistatism, he said, “In every generation, there’s got to be somebody who goes the whole way, and that’s why I believe as I do.” [color=red][hmmm… what might he mean by that?][/color][/quote]

Now, if you balance the positive, practical accomplishments color=blue[/color], against the ideological positions their potential consequences, color=red[/color] you ought to have a better idea why one might wish that his ideology be buried with him.[/quote]

Much less than impressive?

Chile is now the country with the highest nominal GDP per capita in Latin America.

Doctors weren’t licensed until recent history. Why do we still see so much malpractice? Do you really think obtaining a license ensures a person’s ability?

Public education? Surely you are joking. Public education is a placebo and parents think their children are getting an education when in fact they are not. Eradicate public education or call it what it really is. DAY CARE.

Unimpeded private competition ALWAYS produces better results than government systems.

The tax withholding is one of his theories that might be considered by some to be ineffective. But that is a problem with implementation. I believe it should only be applied in short terms rather than used permanently. When a depression occurs where money is tight a small tax can be withheld, thus bolstering the federal government which can invest the collection in a directed manner which improves the economy. When the economy is booming the tax should not be withheld and money should flow freely between consumers and producers creating a boom economy. Some economists believe the opposite. However, when everyone knows the economy is bad they don’t spend money and the economy stagnates or drops even lower. When you have more money on hand and the economy is growing, you will spend more and the economy will improve even more.

Also, even by your own comments you score it at 3 blue, 3 red, and 1 green. But unless I miscounted (it is possible as I went through the public education system) that is a tie. Why do you wish that his ideology be buried with him?

He was one of the greatest economic revolutionaries of this century. Name a few who had greater ideas that had any impact.

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Well, I disagree with your characterization of public education, my remarks were not so much about Chile as the policy prescriptions offered up by the World Bank and IMF, not all of us see much malpractice, and compared with public utilities did Enron do a better job providing electricity in California? But that’s all irrelevant if you accept my distinction between practical accomplishments–like moving to an all volunteer army–and ideological positions–say the social responsibilities of corporations.

No doubt he was one of the great economic revolutionaries. No doubt he did a great deal of good. My view is that the ideology inspiring much of his work is corrosive to the public good.

Who had bigger ideas and a greater impact? Keynes. Schumpeter. Galbraith, maybe (they never settled that debate, and I doubt that we will). Does John Rawls count? His political theories are rich in economics, and have shaped constitutions. Jeffrey Sachs hasn’t had bigger ideas, but may ultimately have a greater impact, ditto Muhammad Yunus who isn’t in the same class but is having a massive direct impact. (I suppose, Amartya Sen’s work will be useful in evaluating the impact of those two, and his own is significant, but a greater impact… :idunno: providing metrics for measuring economic success and relative degrees of freedom isn’t as eye-catching. ) Daniel Kahneman, Amos Tversky and John Nash, IHMO, will definitely have a greater–if less direct–long-term impact as their work goes to better explaining individual motivation, rather than offering policy positions.

Edit: another view; similar, but with more glowing praise than I’d extend.
The Great Liberator
IF John Maynard Keynes was the most influential economist of the first half of the 20th century, then Milton Friedman was the most influential economist of the second half.

Not so long ago, we were all Keynesians. (“I am a Keynesian,” Richard Nixon famously said in 1971.) Equally, any honest Democrat will admit that we are now all Friedmanites. Mr. Friedman, who died last week at 94, never held elected office but he has had more influence on economic policy as it is practiced around the world today than any other modern figure.

I grew up in a family of progressive economists, and Milton Friedman was a devil figure. But over time, as I studied economics myself and as the world evolved, I came to have grudging respect and then great admiration for him and for his ideas. No contemporary economist anywhere on the political spectrum combined Mr. Friedman’s commitment to clarity of thought and argument, to scientifically examining evidence and to identifying policies that will make societies function better.

This all would be enough to mark Milton Friedman as a great man. But beyond Milton Friedman the economist, there was Milton Friedman the public philosopher. Ask reformers in any one of the countries behind what we used to call the Iron Curtain where they learned to contemplate alternatives to communism during the closed era before the Berlin Wall fell and they will often tell you about reading Milton Friedman and realizing how different their world could be.
[…]
Milton Friedman and I probably never voted the same way in any election. To my mind, his thinking gave too little weight to considerations of social justice and was far too cynical about the capacity of collective action to make people better off. I believe that some of the great challenges we face today, like rising inequality and global climate change, require that the free market be tempered instead of venerated. And like any economist, I have my list of areas where I believe Mr. Friedman oversimplified or was simply wrong.

Nonetheless, like many others I feel that I have lost a hero — a man whose success demonstrates that great ideas convincingly advanced can change the lives of people around the world.

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I had to remove many of the links in this thread as they seemed to be causing the thread to freeze.

If you want to repost them, please do not use bbcode (ie do not use [url] etc). If you just post the link in the form link.com then it will show up as a clickable line after it is submitted.

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Enron’s pricing manipulations were only possible because they exploited the interface between a regulated and deregulated system. The situation basically was that California in an effort to deregulate electricity supply in California but to placate those worried about full deregulation came up with a complicated mishmash. First they split the electricity system in two between electricity generators and electricity distributors. Distributors were limited in the price they could sell electricity at to consumers and businesses, but had to buy their electrical supply from generators in a free market. Even worse, they were prohibited from making any sort of long term contracts for electrical supply and had to buy daily on the market (contracts would have stabilized their prices over long terms).

Enron looked at this system and decided to exploit that. They manipulated the market to reduce their supply of electricity to drive up the market price. Distributors could not raise their prices to their customers, so the users of electricity had no incentive to cut back on usage. Distributors were therefore stuck in the middle having to pay enormous sums for electricity and still not being able to buy enough to satisfy demand. The two factors together resulted in rolling blackouts and huge losses by distributors. Despite the ‘deregulation’ being designed to protect consumers from paying more for electricity, they eventually paid for it when the state stepped in to bail out the bankrupt electrical distribution companies with tax dollars.

Keynesian policies are inherently inflationary and the cause of runaway inflation in the 70s. So if by greater impact you mean “destroyed the US economy for over a decade without helping out the little guy like he promised” then sure he had a greater impact. Friedman argued that Keynes’ idea of higher inflation resulting in lower unemployment didn’t work, and was an inspiration to Paul Volcker’s policy change to target inflation instead, which led to the booming 80s economy. (Arguably more than the tax cut and “deficits don’t matter” policies of the Reaganites.)

On the other hand Friedman, like Keynes, was in favor of the Fed manipulating the money supply, he just thought it should target inflation rather than employment. Classical economics (e.g. the Austrian school) would argue that manipulating the money supply shouldn’t be done at all, and for that matter all banks should be private. In any case, the ranks of Keynesian economists have been shrinking in the last two decades, so his impact is fading.

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I’m learning a lot about Mr. Friedman and his Economic theories. Here is another good read on him. This is the lead-off paragraph.
“Friedman was a pragmatic libertarian. He believed that – as an empirical matter – giving individuals freedom and letting them coordinate their actions by buying and selling on markets would produce the best results…that the market system would create new opportunities for trade that would route around market failures…that government failure was pervasive, and that any expansion of government beyond the classical liberal state would be highly likely to cause more trouble than it could solve.” – Brad DeLong"
tcsdaily.com/article.aspx?id=112006D

Another interesting thing I read about him, at one point in his career he was being labeled as a “socialist” by some of his critics. He found this quite funny.

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It makes me laugh to read absolutist positions in favour of, or against markets. Markets are one means of solving economic problems. They’re a good means, sometimes the best, sometimes not.

Keynes came on the scene when it was assumed that the gov’t had no role to play in the economy, and offered a contrary position. Friedman came on the scene when it was assumed that the gov’t had a pervasive role to play in the economy, and offered a contrary position. Such swings are ALWAYS embraced with excessive zeal by a few excitable folks. Friedman recognized this, and embraced the role: “Once, when accused of going overboard in his antistatism, he said, ‘In every generation, there’s got to be somebody who goes the whole way, and that’s why I believe as I do.’”

His embrace of market mechanisms took the theory to a logical extreme, and became an ideological creed. But market fundamentalism, like any fundamentalist belief, falls short because it goes too far.

There’s more than one way to skin a cat.
One enthusiastic Friedmanite prof once went on, rhapsodizing over the effectiveness of deregulation in spurring regulation. To illustrate, he pointed to a historical example: the development of British tea schooners in the 1800s. After supplies of tea drew down, the first (fastest) schooner to arrive could make a massive profit by selling into a high demand market. “Ship design and seamanship advanced meteorically!” gushed the prof. I nodded. “Yeah, that’s cool. But earlier, while Britain was at war with Napoleonic France, the gov’t regulated the tea trade, mandating that a full year’s supply of tea be kept on hand at all times. The ‘strategic tea reserve’ cushioned the public, and market, against artificial shortages.” Prof: “Huh? Really?”

Regulation shaped the market environment such that there was always tea available, conditions were stable, and companies profitted. Deregulation shaped the market environment such that there was always some tea availble, conditions were unstable, there was greater innovation, and companies profitted (at the public’s expense).

In the above case, I gotta lean towards the regulated market. In the contemporary environment, in which deregulation has shaped the market environment such that it’s more profittable for companies to exploit or pollute the environment at public expense, I’ve gotta think that the pendulum’s swung too far. Markets are fine; market fundamentalism is not.