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November 16, 2006

A Critical Eulogy

You have to be impressed with a same-day obituary entitled "Milton Friedman: A Study in Failure." The piece is in no way churlish, but rather a recounting of Friedman's actual impact on public policy, and how often it worked against his small government, free market ideology. It concludes that Friedman, paradoxically, was Big Government's best friend. Well worth a read to better understand the man's public service which, in my view, had some useful outcomes.

Also worth mentioning, by the way, is that Friedman's negative income tax was, and remains, if correctly implemented, a powerfully useful policy tool.

November 16, 2006 | Permalink

Comments

Heh.
The Guardian....the British version of the National Enquirer.

Posted by: Fred Jones | Nov 16, 2006 11:16:11 PM

Heh.
Fred Jones...the American version of the village idiot.

Posted by: pseudonymous in nc | Nov 17, 2006 4:27:20 AM

You mean the American Christopher Hitchens?

Posted by: Jon O. | Nov 17, 2006 5:16:09 AM

Heh.
The National Enquirer... the popular equivalent of wing-nuttery.

Posted by: me | Nov 17, 2006 5:47:32 AM

I thought that piece was vile. We tend to let the body cool before we start attacking people.

Adams is also hopelessly wrong as a number of the comments (including mine) point out.

Posted by: Tim Worstall | Nov 17, 2006 9:15:19 AM

It concludes that Friedman, paradoxically, was Big Government's best friend.

Well, we are all Keynesians now.

Posted by: mds | Nov 17, 2006 9:25:46 AM

I thought that piece was vile. We tend to let the body cool before we start attacking people.

Tim,

You must understand that Friedman promoted the hated Lassie-Faire style of markets for social freedom, the very thing that socialists here abhor. Never mind that his contributions to macroeconomics and microeconomics were vast and he also won the Nobel Peace prize in 1976.

Instead, in several posts, you will see this crowd laud John Kenneth Galbraith, a popular author who was, by all accounts, a lesser academic. However, he preached a path that more closely suited their own philosophy.

So, Tim, it's a matter of who is cheering them on in their quest for a workers' paradise instead of who furthers the social sciences...

Posted by: Fred Jones | Nov 17, 2006 9:31:37 AM

Fred Jones | Nov 17, 2006 6:31:37 AM

...and he also won the Nobel Peace prize in 1976

No he didn't. Friedman was awarded what is laughingly refered to as the Nobel Prize in Economics in 1976.

There is no Nobel Price in Economics. From the Nobel Prize web site, the prize is "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel," in other words, it is awarded by the Swedish Central Bank, of all things.

Posted by: raj | Nov 17, 2006 10:18:46 AM

From the Nobel Prize web site...

Tell me again how they try to distance themselves from this prize (by putting it on the website) and how they don't pretty much give it equal weight.

http://nobelprize.org/nobel_prizes/economics/

Of course, it's your 'job' to demean anyone or anything that doesn't promote the people's socialist paradise.

Good work

Posted by: Fred Jones | Nov 17, 2006 11:14:26 AM

You must understand that Friedman promoted the hated Lassie-Faire style of markets for social freedom, the very thing that socialists here abhor.

Okay, first, "Lassie-Faire" is good: "What's that, Lassie? An invisible hand pushed Timmy down a well?"

But the very thing this "socialist" abhors is Friedman's enthusiasm for the Pinochet "miracle" in Chile, imposed at the point of a gun by a brutal dictatorship, with the assistance of Friedmanites. You know, promoting "social freedom" by torturing and murdering one's citizens. And "laissez-faire" policies imposed forcibly by a dictator? Wow, it's libertarian paradise.

But yeah, between the creation of tax withholding and promulgating exclusive control of the US economy by a single quasi-governmental agency with little accountability, I'd say Dr. Friedman was the best friend small government ever had.

(With this wave of carrying on about "socialist paradises" [Switzerland?], I'm really beginning to doubt the sincerity of Mr. Jones's arguments. What do you think, Lassie?)

Posted by: mds | Nov 17, 2006 11:29:28 AM

Posted by: Fred Jones | Nov 17, 2006 8:14:26 AM From the Nobel Prize web site...

Tell me again how they try to distance themselves from this prize (by putting it on the website) and how they don't pretty much give it equal weight.

They don't, of course. They don't lie about the distinction, but they certainly do their best to paper it over. They are, after all, an entrenched institution, and we have to expect entrenched institutions to put their own organizational interests over the ideals that they were established to serve.

Rather, what it points to is the fact that Alfred Nobel devoted the last years of his life to the study and cause of peace. He thought hard about who he would entrust with the awarding of each of the Nobel Prizes, since he understood that the those awarding the prize would determine how the criteria for the prizes would be interpreted.

And it would be naive to believe that the Bank of Sweden, when they established the Nobel Memorial Prize for Economics, did not have the same thought in mind. One of the reasons that Milton Friedman won the Nobel Memorial Prize for Economics and Joan Robinson did not was because Friedman was pushing an argument that was convenient to the kind of "Treasury View" Economics that the Bank of Sweden wanted to promote, and Joan Robinson did not.

Posted by: BruceMcF | Nov 17, 2006 12:05:06 PM

One of the reasons that Milton Friedman won the Nobel Memorial Prize for Economics and Joan Robinson did not was because Friedman was pushing an argument that was convenient to the kind of "Treasury View" Economics that the Bank of Sweden wanted to promote, and Joan Robinson did not.

The bank chooses the winners? I thought the prize was awarded in the same way as the older Nobel Prizes.

John Nash also won the Economics Prize.

Posted by: Sanpete | Nov 17, 2006 12:13:06 PM

John Nash also won the Economics Prize.

Yeah, I saw that on the site as well, but didn't want to bust their bubble.

Posted by: Fred Jones | Nov 17, 2006 12:24:48 PM

Instead, in several posts, you will see this crowd laud John Kenneth Galbraith, a popular author who was, by all accounts, a lesser academic. However, he preached a path that more closely suited their own philosophy.

So, Tim, it's a matter of who is cheering them on in their quest for a workers' paradise instead of who furthers the social sciences...

Fred, do you have a shrine to Karl Marx in your home?

No? Then why do you think it necessary that a bunch of liberals laud the work of a man with whom they passionately disagree? Karl Marx did far more to further the social sciences than 20 Friedmans - his work and legacy have inspired countless studies and careers for both rightist and leftists.

You make this type of argument a lot, but the only person you're catching in moments of intellectual dishonesty is yourself.

Posted by: Stephen | Nov 17, 2006 1:54:41 PM

John Nash also won the Economics Prize.

Yeah, I saw that on the site as well, but didn't want to bust their bubble.

Wait a minute, are we talking about liberal icon John Nash? Whoops, the whole basis of BruceMcF's skepticism about the Economics Prize is undermined. Where would the liberal conception of economic justice be without game theory? Thanks so much, you jerks. Which bubble are you going to puncture next, our belief in a free lunch? Wait, that's one of yours.

"What's that, Lassie? We're still too far to the right on the Laffer curve? Ted, get the truck. Time to cut the top marginal rate to zero!"

Posted by: mds | Nov 17, 2006 1:59:28 PM

Wow. I've apparently been called a jerk, in italics. MDS, I think you're reading too much into what I said, and overreacting a bit. At least with the italics.

Now, let me recover from this assault.

Posted by: Sanpete | Nov 17, 2006 2:28:57 PM

Stephen,

Prescriptive social theory and descriptive behavioral science are not interchangable.

Posted by: Fred Jones | Nov 17, 2006 2:31:11 PM

Posted by: Sanpete | Nov 17, 2006 9:13:06 AM John Nash also won the Economics Prize.

Another example that illustrates my point. The Nash equilibrium is a key tool for utilitarian game theory, and that is essential to maintaining contact between game theory arguments and traditional marginalist economics.

For those looking for the counter-examples, I'll save you the time ... Gunnar Myrdal, Wassily Leontief, Herbert Simon, Arthur Lewis are the notable exceptions.

Of course, Gunnar Myrdal was the same year as Hayek, so they may have been aiming for an appearance of balance that year. And it doesn't hurt being a prominent Swedish economist and former director of the Bank of Sweden, even if your work is focused on institutional analysis of the process of development.

Posted by: BruceMcF | Nov 17, 2006 2:35:40 PM

My point was only that someone who's been celebrated a lot recently for his contribution to math and economics (well, and also for being mentally ill in an interesting way) was among the laureates.

The Nobel Prizes have often been accused of political bias, but usually towards the left.

Posted by: Sanpete | Nov 17, 2006 2:49:50 PM

Posted by: Sanpete | Nov 17, 2006 11:49:50 AM The Nobel Prizes have often been accused of political bias, but usually towards the left.

You are thinking of the Nobel Prize for Literature and the Nobel Peace Prize.

Nobel Memorial Prizes in Economics include, in addition to Friedmand, Arrow and Debreu for GE theory, Ohlin for the neoclassical theory of trade, Lucas for the fantasies of rational expectations modelling, Solow for neoclassical growth theory, Buchanan for the 'public choice' school in political science, Becker for neoclassical fantasies about consumer behavior, and of course Hayek.

It would be a category mistake to ask whether the dominance of empty neoclassical theorizing in the profession supports or is supported by their dominance of Nobel Memorial Prizes ... its part of the positive feedback system that helps maintain that dominance.


Posted by: BruceMcF | Nov 17, 2006 4:11:21 PM

I think we are getting off track here.

We were at the point where Freidman died and you couldn't bring yourself to acknowlege that he was a giant who won the highest prize for economics, regardless of how you wish to characterize it, because his theories stood in the way of your workers' paradise.

That about it?

Posted by: Fred Jones | Nov 17, 2006 4:30:51 PM

Prescriptive social theory and descriptive behavioral science are not interchangable.

You apparently have no idea just what it was that Marx was doing. His conclusions came from his understanding of the inevitability of certain societal structures to fail and certain others to take their place.

No one had a problem admitting that Friedman was a pretty big deal, or that he won awards. Your problem, as it always is when discussing conservative figures, is that the commenters here did not sufficiently praise the person in question to suit your own tastes and biases.

You have admitted that the US government, at least, is much larger, in every metric, than it ever was. I believe you have admitted that the US government has grown under every president, every congress. In fact, all the present governments in the world have a pretty much unbroken record of increasing their size and scope. If Friedman was in fact trying to turn that tide, then he and his ideas, so far at least, have failed.

The number of awards the man won, their provenance and exact wording are irrelevant to both the discussion about Friedman and your initial problem with Ezra's post.

Posted by: Stephen | Nov 17, 2006 4:49:25 PM

My initial problem with Ezra's post was that he used the first source that suited his tastes, regardless of the reliability or stature. Let's face it, the Guardian is a rag.

Marx was a theorist, but was uninterested in proving his theories because he just knew he was right rightous.

Posted by: Fred Jones | Nov 17, 2006 5:14:34 PM

Marx was a theorist, but was uninterested in proving his theories because he just knew he was right rightous.

Spoken with impeccable ignorance, as ever.

Posted by: pseudonymous in nc | Nov 17, 2006 6:13:26 PM

Here is Milt Friedman on withholding:

Reason: You were involved in the development of the withholding tax when you were doing tax work for the government in 1941-43?

Friedman: I was an employee at the Treasury Department. We were in a wartime situation. How do you raise the enormous amount of taxes you need for wartime? We were all in favor of cutting inflation. I wasn't as sophisticated about how to do it then as I would be now, but there's no doubt that one of the ways to avoid inflation was to finance as large a fraction of current spending with tax money as possible.

In World War I, a very small fraction of the total war expenditure was financed by taxes, so we had a doubling of prices during the war and after the war. At the outbreak of World War II, the Treasury was determined not to make the same mistake again.

You could not do that during wartime or peacetime without withholding. And so people at the Treasury tax research department, where I was working, investigated various methods of withholding. I was one of the small technical group that worked on developing it.

One of the major opponents of the idea was the IRS. Because every organization knows that the only way you can do anything is the way they've always been doing it. This was something new, and they kept telling us how impossible it was. It was a very interesting and very challenging intellectual task. I played a significant role, no question about it, in introducing withholding. I think it's a great mistake for peacetime, but in 1941 43, all of us were concentrating on the war.

I have no apologies for it, but I really wish we hadn't found it necessary and I wish there were some way of abolishing withholding now.

Posted by: Joe O | Nov 17, 2006 9:42:34 PM

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