Sunday, November 29, 2009

What would Milton Friedman say?

Stephen Moore, senior economics writer at the WSJ, speculates about Friedman's response to the current economic crisis in his new book, How Barack Obama is Bankrupting the U.S. Economy:
At times like this, I become more nostalgic for the indispensable missing voice in this debate: Milton Friedman's. No one could slice and dice the sophistry of the left's government-market interventions better than Friedman. Imagine what he would have to say about the arrogance of the U.S. government of owning and operating the car companies or managing the $2 trillion health-care industry. "Why not?" I can almost hear him ask. "After all, they've done such a wonderful job of delivering the mail..."

"I've been thinking a lot lately about one of my last conversations with Friedman, when he warned that "even though socialism is a discredited economic model and capitalism is raising standards to new heights, the left intellectuals continue to push for bigger government everywhere I look." He predicted that people would be seduced by collectivist ideas again. He was right.

As Friedman said in his book, Capitalism and Freedom, "freedom is a rare and delicate plant."

Yes, it is.

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Blogger Dr.Alistair said...

some people are seduced by collectivist ideas, just as long as they get a big piece.

and it worked so well for the chinese.

9:08 AM, November 29, 2009  
Blogger Capn Eddie Ricketyback said...

My favorite Friedman book was Free to Choose. It was actually made into a multi-part documentary on PBS, but very poorly edited, keeping in many slips and stutters of Friedman during his interviews. I always thought they kept them in to intentionally discredit him, but then again I also believe that this current administration and congress are intentionally bankrupting this country in order to gain complete control.

9:21 AM, November 29, 2009  
Blogger DADvocate said...

I'm continually amazed by how many are seduced by collectivist ideas. Curiously, I believe that, whilt collectivism is generally promoted as a more humane, caring form of society/government, that the motive of most people in supporting it is greed. They want something without having to work for it.

Politics is about power and control. Leftist politicians like collectivism because is gives them greater power and control. Money is secondary. They want money and control of your money because is gives them greater power. Despite what the Bible says, lust for power is a greater evil than greed for money.

As the quote from Aesop's Fables says, "Better starve free than be a fat slave."

10:11 AM, November 29, 2009  
Anonymous Anonymous said...

The problem with this is that Friedman et al ruled the politics and the marketplace till we got the economic meltdown: where was their useful voice before it happened? Even Greenspan has done a mea culpa

This sentimental lamenting for what was is just like what the conservatives were saying and arguing back in 1929 when FDR began massive changes to rescue us--of course you will argue that he didn't rescue us but the war did--the WWII spending created jobs!
The conservaitves continued to argue an unregulated "free market" and no govt involvement...but that was not going to change anything at that time. Nor would it now.
We had Friedman economics and we now have the mess.

10:21 AM, November 29, 2009  
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12:10 PM, November 29, 2009  
Blogger Capn Eddie Ricketyback said...

Holy Smokes! Give me a double dose of what fred @ 10:21 AM, November 29, 2009 is smoking! When has "Friedman et al ruled the politics and the marketplace?" Certainly not in my lifetime and I'm 75 years old. Ever heard of Fannie Mae, Freddie Mac, Affirmative Action and the ever-increasing plethora of other government controls that our marketplace has had to cope with over the years? I'm surprised it hasn't collapsed before now, and if this Chicago Gang is not stopped somehow they'll finish the job and soon.

12:44 PM, November 29, 2009  
Blogger Dr.Alistair said...

ww2 covered up a substantial amount of stupidity from the governments of the thirties.

we have finally spent the last of the war money and so, i would imagine, it will only be a matter of time before we have to go again.

war is long as you are investing in the means....

2:22 PM, November 29, 2009  
Blogger gs said...

It's also a pity that Fischer Black, though born in 1938, died in 1995. If he were alive and heeded, he well may have helped to deal with, or maybe even avert, the crisis.

Black took the lead in formulating the fundamental Black-Scholes-Merton model of derivative valuation. He is the only member of that trio with significant practical experience. "Markets look a lot less efficient from the banks of the Hudson than the banks of the Charles."

4:34 PM, November 29, 2009  
Blogger BarryD said...

It's disingenuous to call Greenspan's mea culpa an indictment of the free market and of conservative (dictionary not politics) monetary policy. When he was hanging out with Ayn Rand and company, he wrote about bringing back the gold standard, and condemned what he would later do as Federal Reserve Chairman.

If anything, his recent mea culpa was a vindication of the beliefs he had himself abandoned.

I'm not arguing for the gold standard, here. I'm just saying that the Greenspan that people like to invoke was not the same Greenspan who had a part in the current mess. In many ways, rhetoric aside, his policies were the opposite of what he had once advocated as a free-market champion.

7:59 PM, November 29, 2009  
Blogger Trust said...

@fred said... "The conservaitves continued to argue an unregulated "free market" and no govt involvement...but that was not going to change anything at that time. Nor would it now.
We had Friedman economics and we now have the mess."

It was government intervention that is largely to blame for the mess we are in. Here are some inconvenient truths:
1. It was the Clinton Administration that strong-armed financial institutions into sub-prime mortgages, as reported in the September 1999 New York Times.
2. It was the Bush Administration that tried to address the pending crisis, yet was accused of alarmism by Barney Frank, who claimed they would it if they caused people to worry. Yet, guess who Frank now blames for it (and, to be fair, Bush should not have let Frank stop him from dealing with it).
3. Free markets must be regulated. No one doubts that. However, the markets generally have good reasons for not wanting to do somethings, and those reasons can be good or bad. An example of good intervention is forcing industries to avoid polluting or shirking safety standards to save money. An example of bad intervention is forming financial institutions to loan money to people who can't pay it back.

I also love how liberals foam at the the mouth to try to pin this on conservatism, especially as Bush actually governed to the left of Clinton. Yes, the collapse is a failure of political policies--but the policies that failed were not conservative policies. It was liberal policies that failed, they are just being pinned on a CINO (conservative in name only).

9:24 PM, November 29, 2009  
Blogger doowopster said...

Freidman's series is available at the link:

Still worth watching. Wish someone would air it again..

10:28 PM, November 29, 2009  
Blogger Dr.Alistair said...

fiat currency.

andrew jackson abolished the bank of america in 1836, thereby temporarily halting spiralling inflation.

big business re-instated infationary banking practices not long after and we have suffered recessions and inflation ever since.

obama and reagan and washington and clinton all undersood that to control the money supply is to control society.

we can argue on the legal and political status of the federal reserve and what it actually is all we want, but when banks can re-loan money and create paper currency unattached to actual economic activity, we are always going to have foreclosures and bancrupcies.

these are human rights violations if ever there were such a thing.

9:43 AM, November 30, 2009  
Blogger Byron said...

"After all, they've done such a wonderful job of delivering the mail..." Quite and an audacious and ignorant comment considering the following blue ribbon performances: General Motors, Lehman Brothers, Washington Mutual, WorldCom, Enron, Chrysler...and capatilism has done wonders in countries like Honduras, Haiti, Mexico, Bolivia, Congo, Tanzania, Mozambique, Romania, Bulgaria, Poland, Cambodia, Bangladesh ... the list goes on and on and on... and since you are going to bring up the Soviet Union and the countries of Eastern Europe, they were not "socialist states". They were Stalinist states ruled by a totalitarian bureaucratic elite, not by working people.

Finally, unregulated capitalism is bad and the above is proof of that... what we need is regulated competition. The ups and downs of markets based on pure Laissez-faire economics is bad for everyone and especially harmful for the poor. Regulation should strive for even, steady growth which will attempt to quell the insecure ups and downs inherent in this system.

10:41 AM, November 30, 2009  
Blogger jimbino said...

Byron doesn't seem to have heard of capitalism's beautiful "creative destruction."

In a free market, buggy makers like Montgomery Ward, Woolworths and the corporations he cites properly die to make way for Amazon, Walmart and eBay. This is a GOOD thing.

The problem in Amerika is that we don't let the moribund USPS or the public school system die off.

He has also not heard of Chile, the only SA country to have implemented something resembling the free market. They have privatized social security and are far outstripping their neigbors, including Brazil and Argentina that are richer in land and natural resources.

12:28 PM, November 30, 2009  
Blogger Byron said...

Jimbo... you obviously missed the point... I said competition was GOOD... next time read and understand what you are going to criticize. Also, I loved your comment that the problem with America is that we don't let the USPS or public school system die off...that has to be one of the most illogical statements I have ever heard. What is this fanciful capitalist society you are comparing America to, that doesn't have these horrible public schools and this archaic postal system? Public schools are our problem??? I think you must be trying to agitate me, because you really couldn't be that stupid and believe your comment.

And then you said this..."Chile, the only SA country to have implemented something resembling the free market"... Jimbo, I guess your hero is Pinochet. What a great guy!!!..and so you know, Chile has one of the highest discrepancies in wealth distribution with 25% of the population considered "destitute". The infant mortality rate among the poor is many times higher than that of the rich... And Chile a beacon of free market capitalism??? I don't think so, Chile has finally implemented strict laws regulating their capital markets... and finally if free-markets worked then according to Friedman, you wouldn't have wealth inequality, in fact implementing Friedman's ideas into the Chilean system actually refuted his own assertions. That is the case in Chile, United States, Mexico, Honduras, ...

1:41 PM, November 30, 2009  
Blogger jimbino said...


Is competition in delivery of first-class mail GOOD or BAD? Is privatizing primary and secondary schooling GOOD or BAD?

Pinochet is a great guy compared with FDR and LBJ. He killed fewer folks and implemented market reforms.

Anyway, you get an F for confusing the brutality of fascists like Stalin, Pinochet and Hitler with their economic policies.

You want some great working markets like the USSA used to know? Try Estonia, Hong Kong, Singapore and even New Zealand.

You think wealth and income distribution are better in Bolivia? Maybe Brazil? Maybe Britain, 1900s USSA?

Now places like Bangladesh, Burma and Sudan show less income disparity, it is true, proving that capitalism is the worst economic system, except for all the others.

2:18 PM, November 30, 2009  
Blogger Byron said...


You are actually using Bolivia as an example of socialism going bad? The place where Che Guevara was killed trying to overthrow the capatalists pigs? My guess you are a student of recent history and thus blame all of Bolivia's problems on Morales who was elected in 2005.

And where did you come up with the idea I am confusing Stalin, Pinochet and Hitler... Are you chewing those legalized coco leaves that Morales recently legalized?

And my suggestion to you, is that you go around S. America and tell people your theory on why Pinochet is better than FDR and LBJ...Maybe that way this earth will be slightly more intelligent...

6:50 PM, November 30, 2009  
Blogger Peter G. Miller said...

What do you think Friedman would have said about the $4.35 trillion deficit left behind by the last President Bush?

Or about the massive balance of trade deficit which has left us in hock to unfriendly overseas nations. Is that really good for our political independence?

All the best,


12:53 PM, December 01, 2009  
Blogger TMink said...

Peter, I think Friedman would have been livid. I know I am. Honestly, I do not know anyone on this board who is a huge Bush supporter. Your points are spot on, and we agree.

And the current administration makes Bush look like a school girl spending her girl scout money unwisely. Agree?


2:05 PM, December 01, 2009  
Anonymous Anonymous said...

1. Peter, I must assume you're talking about cumulative debt, not annual deficit. There is a difference, and people who comment on economic matters ought to know it. From the link you provided:

"09/30/2009 11,909,829,003,511.75
09/30/2008 10,024,724,896,912.49
09/30/2007 9,007,653,372,262.48
09/30/2006 8,506,973,899,215.23
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86"

Now, I am no fan of Bush the Younger's (lack of) fiscal restraint. But to use this as a recommendation for Obamanomics is insane: The One has already doubled the rate of deficit spending of Bush's worst year, and much of the infamous "stimulus" has not yet been spent.

4:03 PM, December 01, 2009  
Blogger TMink said...

"and much of the infamous "stimulus" has not yet been spent."

But it sure makes a delicious slush fund.


4:42 PM, December 01, 2009  
Blogger Peter G. Miller said...

Trey says, "And the current administration makes Bush look like a school girl spending her girl scout money unwisely. Agree?"

In a sense it's like blaming a fire brigade for the acts of an arsonist. It doesn't matter who followed Bush or what their political perspective, they would be left with a massive deficit, two wars, a damaged economy, a $700 billion bailout, etc., etc.


7:47 PM, December 01, 2009  
Blogger ballyfager said...

@Fred - FDR became President in March 1933. He used a not well thought out scattergun approach. Whether he shortened or lengthened the Depression is an arguable point

8:07 AM, December 02, 2009  
Blogger TMink said...

Peter, you are looking like a blame Bush hack now. The correct use of the metaphor would have been to identify two arsonists, the one who started the fire, and the one who brought a truck load of accelerant.

And, you of all people must know that the Democrats in Congress made the budget from 2006 on. Bush signed them, to his shame, but he did not write them.

Our economic problems started with big spending politicians of both parties, to be sure. But only one party has written significant legislation since 2006. That condition, like our economic woes, have only worsened since 2009.

If you consider the data and reality above political loyalty that is.


8:19 AM, December 02, 2009  
Blogger Peter G. Miller said...

I realize that facts and reality may not count, but for the record the Congress in 2006 was controlled by the Republicans:

109th Congress (2005-2007)

Majority Party: Republican (55 seats)
Minority Party: Democrat (44 seats)
Other Parties: Independent (1 seat)
Total Seats: 100

House of Representatives
Majority Party Republican (231 seats)
Minority Party Democrat (202 seats)
Independent: 1
Vacant 1
TOTAL: 435

Peter G. Miller

8:53 AM, December 02, 2009  
Blogger TMink said...

My bad. 2008! I can count, but I can't write!

I look forward to your response after having helped with the correction of my typo.


10:46 AM, December 02, 2009  
Blogger Peter G. Miller said...

TMink --

Fair enough, we all generate typos.

The idea of "control" in Congress means not just a slight majority because the Democrats do not vote in unison. In the Democratic count you have conservatives, moderates and liberal who organize together -- but that does not mean they have a majority on any issue.

In the end there is a difference between real political power and the illusion of political power. The perfect example is today's Senate where the Democrats allegedly have 58 votes for organizing purposes -- but they need two independents to get to 60.

If like many you prefer a smaller government, a smaller deficit, fewer foreign entanglements and less government intrusion in private areas, then the Bush Administration was a disaster. He was the President for eight years, he surely did something during his term in office, and the buck really does stop there. He ought to be accountable for his presidency.

All the best,


12:08 PM, December 02, 2009  
Blogger TMink said...

Peter wrote: "If like many you prefer a smaller government, a smaller deficit, fewer foreign entanglements and less government intrusion in private areas, then the Bush Administration was a disaster."

We are on the same page brother.

Now let me go to my thesaurus. Ahhh, these will do.

The Bush administration was a disaster: The Obama will be a calamity, a cataclysm, a ruination, and a tragedy.

I was going to say holocaust, but that would be hyperbole.

But we sure agree about the Bush administration.


6:06 PM, December 02, 2009  
Blogger Capn Eddie Ricketyback said...

I guess this thread's about done, but Peter @ 12:08 PM, December 02, 2009 says that the Bush administration was a disaster, which is agreed, but he doesn't seem to care that we now have, as Victor Davis Hanson reminds us:
"a president who has just given the country its largest annual budget deficits in history, and who will, according to his own schedule, add more to the national debt than all previous presidents."

Would you buy a used piece of real estate from that man?

12:54 PM, December 03, 2009  

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