A Great Man is Dead

Milton Friedman was the most influential public intellectual in my lifetime and in my life. His simple message, that individuals make better choices about their own lives than government, was unappealing at first. I thought it was clear that we - collectively- could/should make wise decisions for the greatest good, justice and efficiency. Didn’t fair wages and prices make sense? Wasn’t competition wasteful and profit morally suspect?

I was a sophomore when I first encountered Freidman. I disilked him. Sophomore means wise/fool and it well describes the species. There is no time in your life when you have more confidence in the righteousness of your intellectual opinions and no time in your life when that confidence is less justified. It is natural to be attracted to leftist economics at that age and almost everybody around me at the University of Wisconsin confirmed my beliefs.

I ignored Friedman, but I eagerly watched the PBS series “The Age of Uncertainty”. It made sense in the 1970s. I liked the urbane John Kenneth Galbraith. He confirmed all my prejudices and he did it in such elegant phrases. But something didn’t quite make sense. I was always interested in history and it seemed to me the time Galbraith described in such depressing, if clever, terms was the time of the greatest expansion of human well being in history. Ordinary people were much better off at the end of the age of uncertainty than at the beginning.

When “Free to Choose” came out specifically as a counter to “Age of Uncertainty” I was prepared not to like it but curious. How could this little bald guy could counter what seemed to be revealed truth about the economy? Wasn’t it just true that the rich got rich by exploiting the poor? Galbraith had phased it so well. Old money came from piracy and war and new money came from exploiting workers and consumers. The rich got richer and the poor got poorer.

My father believed that sort of thing. His father emigrated from Poland and never made much money. My father dropped out of HS to work at an unskilled job where he stayed. But that very family history, poor as it was, seemed to counter the leftist ideas. My grandfather was much poorer than my father. He rented a dumpy house without true indoor plumbing and raised seven kids there. My father and all his siblings (except one drunken brother) managed to own their homes and live a decent life. My grandfaher had a grade school education. My father got as far as the tenth grade. I got to go to college. One of my older cousins was a doctor and all those not excessively fond of whiskey and beer were doing okay. Life just didn’t seem that oppressive and it was getting better. The poor were getting richer, not poorer.

I watched “Free to Choose” and then got one of Freidman’s books, “Capitalism & Freedom”. That led me to Hayek This is the comic book version. Free markets started to make more sense. Free markets and free choice were the best ways to make our country - any country - prosperous. Regulation and socialism were status quo. I also noticed that at UW, the rich kids tended to be leftist. They loudly protested lots of things I thought were okay. They dressed working class, except for their expensive Frey boots and when they said the F word, which they did a lot, they pronounced it f*ing. True working class just left out the g as f*in’. I didn’t want to be like them and Freidman explained why.

I disagree with Freidman about some things. My experience in E. Europe taught me that government has a positive role to play in the creation of infrastructure. I also would put a little more emphasis on the rule of law and accept some regulation. Developing country financial markets, for example, need significant regulation. Even ours can use a little some time. Targeted government sponsored R&D was also crucial to the progress of the free market. But those I things I learned later and after I had used Freidman to created the intellectual infrastructure to disagree on details. I do not know his exact opinions on such things in his later life in any case.

Anyway, in November 1980 I voted for Ronald Reagan and stopped paying attention to guys like JKG, except to copy their beautiful syntax when I could. (Lefties can often turn a better phrase.) That is how I got on the red side. I credit Milton Freidman.

Milton Freidman is gone. We shall not soon see his like again.

Posted by Jack at November 16, 2006 8:54 PM
Comments
Comment #195459

Nice elegy, Jack.

Posted by: Trent at November 16, 2006 9:19 PM
Comment #195471

Friedman, later in life, abandoned his funny-money fiat monetary system views.

Posted by: d.a.n at November 16, 2006 9:57 PM
Comment #195475

d.a.n.

I do not recall any big changes in his ideas about montetary policy. “Friedman’s monetary framework has been so influential that, in its broad outlines at least, it has nearly become identical with modern monetary theory and practice,” Mr. Bernanke said.

You links lead to one of your own charts.

Posted by: Jack at November 16, 2006 10:29 PM
Comment #195476

Machiavelli, Smith and Keynes all said it better and with less words…but better said don’t make ‘em right…just far right.

Posted by: Marysdude at November 16, 2006 10:38 PM
Comment #195479

Machiavelli didn’t write much about economics, but it is true he used few words. Do you consider Keynes far right? I think most people would disagree, but that is your business. (JKG was one of his followers and most people thought of him as a leftist, maybe even a socialist)I do not think he used fewer words, however?

Speaking of fewer words, I own a copy of the “Wealth of Nations” It is a lot bigger than “Free to Choose” or “Capitalism & Freedom”.

Of course do your really mean “less” words. Friedman uses shorter words than Smith, but he uses fewer of them.

Posted by: Jack at November 16, 2006 10:45 PM
Comment #195484
“Friedman’s monetary framework has been so influential that, in its broad outlines at least, it has nearly become identical with modern monetary theory and practice,” Mr. Bernanke said.

I was under the impression that Friedman’s view of monetary policy was that the government shouldn’t have one. Or in other words, that Ben Bernanke shouldn’t have a job.

Posted by: Woody Mena at November 16, 2006 10:54 PM
Comment #195502

Jack
From your short bio above, it shows that when you keep an open mind and question those things that don’t seem right, as you grow older the wisdom begins to kick in. I have followed Milton from his early days at U of Chicago. He also was a strong influence in another scholar, Tom Sowell, who I also admire deeply.

Posted by: tomh at November 17, 2006 12:12 AM
Comment #195506

I agree with Woody. Friedman was a Neocon (one of the first of such creatures), and while he always tried his best to seem as though he was thinking deeply and arriving at his opinions in a judicious manner, it was all an elaborate ruse — because somehow he always landed on the exact same idea: that selfishness and greed is good, and that the government must be completely deregulated and dismantled. Unlike Galbraith, who was an intelligent and thoughtful man who truly believed in the idea of the public good,
Really, Friedman’s entire philosophy can be easily be reduced to this: If someone doesn’t make enough to pay their rent, are evicted from their home, and end up as a street person where nobody cares or helps them, then we’ve got a good government. But if the government dares to set a mimimum wage, or a limit on the amount of rent people must pay, and shows in anyway that it cares and wants to help people avoid having to live on the street, then what we have is a bad government. In other words, Dog Eat Dog.

John Kenneth Galbraith’s economic theories actually helped this country, especially during WWII when he worked as the deputy head of the Office of Price Administation for FDR, effectively keeping inflation from crippling the country and the war effort. Friedman by contrast only worked to make rich American’s richer, and his economic theories have deeply harmed our country, and taken many American jobs.
Indeed, I think it is an insult to even mention Galbraith in the same breath as Friedman, let alone actually attempt to discount and ridicule JKG’s theories. Yet, Jack has done so in this article, in order to eulogize Friedman and promote the man’s transparent selfishness and lack of basic humanity.

Friedman RIP? I personally can’t see why he should.

Posted by: Adrienne at November 17, 2006 12:46 AM
Comment #195517
Jack wrote: d.a.n. I do not recall any big changes in his ideas about montetary policy. “Friedman’s monetary framework has been so influential that, in its broad outlines at least, it has nearly become identical with modern monetary theory and practice,” Mr. Bernanke said. You links lead to one of your own charts.


Jack,

In one of Friedman’s own books, he cites many harsh lessons from postwar hyperinflation in many countries. He also claims that Roosevelt’s confiscation of gold and silver (1933) may have skewed China’s silver-based economy toward eventual communism. It is this sort of meddling and tinkering that is at the root of many economic problems.

When Franklin Roosevelt was asked to do deal with silver, he had already confiscated all gold at $20.67 an ounce, and then subsequently raised the price to $35 ! FDR then said: “All right. I experimented with gold and that was a flop. Why shouldn’t I experiment a little with silver?”

Friedman also states in his own book that uncontrolled money growth (i.e. excessive money-printing) is the cause of inflation, and has many bad side-effects, such as eventual economic instability and unemployment.

Friedman, in his book “Money Mischief” devotes a large part of the book to the principles and problems of fiat-funny-money that is NOT linked to any commodity of any kind.

So, that pretty much sums up my point.
Friedman essentially finally realized the problems with a fiat-funny-money-system and money that is NOT backed up by something of value. Also, if you look at inflation since 1800, it was fairly stable UNTIL the switch-over to a fiat-funny-money system started in 1913.

But, then, you don’t have to be a rocket-scientist to understand that. The constant tinkering with the money-supply and the intentional inflation of 3% to 5% (or more) creates bubbles, as everyone runs around like chickens with their head cut off trying to find some place to invest it to stop the continual erosion of that money.

To really understand why the dishonest fiat monetary system is so popular among some economists, the business community, bankers, and government officials, you need to understand how it gives them the power and influence to put money in their hands, first, early in the circulation cycle, before the currency loses its value due to inflation. This dishonest system shifts the loses to others that don’t understand how they are being used.

What Friedman realized late in life that there was one major problem with the fiat-monetary-systems. The lack of discipline to manage it responsibly. A lack of transparency and accountability inevitable leads abuse. A fiat monetary system does not theoretically require it be backed up by anything but faith, but money backed up by something more that that (e.g. gold, commodities of some sort) reduces the rampant money-printing.

Look at the inequities we see now between nations as they toy with their monetary systems to get an advantage on one another. Look at the trade imbalances and inequities. Part of the problem is simply bad, dishonest, fiat-funny-money monetary policy.

So, the ever present inflation (once strongly promoted by Friedman) is destabilizing, and the Federal Reserve and the government are little better than counterfieters. The amount of massive borrowing and money-printing is a perilous path
Year:___M3-Money___$Increase_
1988: $3,928.80 $242.30
1989: $4,077.10 $148.30
1990: $4,154.70 $77.60
1991: $4,210.30 $55.60
1992: $4,222.60 $12.30
1993: $4,285.60 $63.00
1994: $4,369.80 $84.20
1995: $4,636.30 $266.50
1996: $4,985.50 $349.20
1997: $5,460.90 $475.40
1998: $6,051.90 $591.00
1999: $6,551.50 $499.60
2000: $7,117.60 $566.10
2001: $8,035.40 $917.80
2002: $8,568.00 $532.60
2003: $8,872.30 $304.30
2004: $9,433.00 $560.70
2005: $10,154.00 $721.00

But, that’s not the whole picture. Not only do we now have excessive money-printing, we ALSO have massive borrowing (to help keep inflation low). There’s just one BIG problem with that. That debt will cost plenty later. It is already costing 20% of federal revenues. This is truly painting one’s self into a corner, with few options left, but one: print MORE money. It becomes a snowball effect. The only way to get control of it (if ever) WILL be painful. There WILL be side-effects. Maybe just recessions and unemployment. Maybe worse. Recessions occur every 2-to-11 years for the last 46 years. How prepared are we, with more federal debt than ever before ($22 trillion), more personal debt than ever before ($20 trillion), government larger than ever before, total federal debt-to-GDP worse than ever before ($22T/$12.5T == 167%), foreign competition is stronger than ever before ?

What is happening now, and we are starting to see signs of it (since 1980: growing corpocrisy, corporatism, FOR SALE government, government influenced by a few with vast amounts of money, the lower-to-middle-income-classes being squeezed, median incomes fallen below 1999 levels, bad fiscal policy and massive debt, bad monetary policy and massive money printing, etc., etc., etc.), is a type of implosion, where the nation starts feeding on itself (in this case, the lower-to-middle-income-classes, as it shrinks and shrinks). For example, in 1980, the 1% of the people had 20% of all wealth. Now it is 40%.

Adrienne wrote: In other words, Dog Eat Dog.
That pretty much sums it up precisely.

There are 2 classes in society:

  • (a) One class derives concentrated power from huge and concentrated amounts of money and property.

  • (b) The other class has power ONLY in sheer numbers (population), and that power is largely ineffective due to lack of self-education to organize (such as merely not blindly and sheepishly continually re-electing, rewarding, and empowering irresponsible, bought-and-paid-for incumbent politicians; the very ones that use and abuse them, incumbent politicians that are in-league with a few with vast amounts of money that they abuse to control government). Essentially, they are being out-thunk, used, and abused.

BTW, one of Friedman’s most sinister deeds was his role (whihc he proudly played) in the Treasury Department, in creating the system of the withholding income tax from payroll. Before that, people paid their annual income tax in a lump sum on March 15th. Well, that made the total tax bill very visible to tax-payers. So, to get around that, a little smoke-and-mirrors was required. Friedmen suggested the payroll tax, so that MORE tax could be extracted; a little bit at a time, making the total tax larger, but less noticeable. So, the Friedman “payroll tax” has given the government the power to use every employer as an unpaid tax collector, extracting the tax quietly and less noticably from each payroll. So, Milton Friedman, thank you very much for that monster, paving the way to a government that continues to grow and grow to nightmare proportions.

Friedman advocated manipulative monetary and fiscal policy, with an increase of money-supply by the Federal Reserve at a rate of 3%-to-4% annually, even though he later learned that those manipulations had inevitable time lags, and are therefore bound to exacerbate, rather than help things.

While many of the reasons used to promote a fiat-funny-money-monetary system sound plausible, they don’t really solve anything, and in many instances, have disastrous side-effects. But, more than anything else, it is, to me, an unethical and dishonest system that benefits those early in the cycle of distribution of the new money, and undermines those at the end of the cycle, who see that erosion of their hard-earned income due to the insidious, ever-present inflation.

Friedman’s fatal flaw in his promotion of a fiat-funny-money system is that it turns all monetary power over to the government, and fails miserably to understand that this scheme would be inherently inflationary because of those that get and spend the money early in the cycle to get an unfair advantage, and government trying to use it to shrink debt from massive, irresponsible borrowing.

The irony of Friedman’s philosophy is that it will eventually destroy itself, becasuse each government, providing its own fiat-funny-money, mostly independent of all other nations’ fiat-funny-money, causes confusion, inequities, fluctuating exchange rates, chaos, and a lot of room for abuse. Late in Friedman’s career, he began to suspect this, and started to write about the many problems of money that is NOT linked to anything of real value. Nevermind, a lot of people were trying to tell him that all along.

Milton Friedman. Great man? I don’t see experimentation on the public, with many long-lasting negative side-effects, manipulation government manipulation of money and markets, the payroll tax, and advocating a fiat-funny-money-system, as great.

Why can’t government do a better job of ENFORCING the existing laws to prevent predatory and monopolistic practices, investment/stock fraud, price-fixing, etc. (all those things that gave rise to the anti-trust laws), instead of thinking it can fix everything by manipulating it? One thing that should be clear is that all these government manipulations and meddling don’t work, which is why many advocate less government meddling, less government manipulation, and less government (in general), and BETTER law enforcement. That is what is needed first (and let the chips fall where they may). That is ethical.

But, look at the size government has grown to now! It has grown to nightmare proportions, and continues to grow. It has never been bigger, and neither has debt. It is approaching the point (if it hasn’t already reached it) where it provides NO net benefit to society. That’s why they call it a Do-Nothing Congress.

The people will flourish when they no longer have that anvil (bloated government) around their neck as they try to swim upstream. Unfortunately, in a voting nation, that requires education, and that can’t happen (not quickly anyway) as long as voters keep re-electing, empowering, and rewarding those very same incumbent politicians that keep using, manipulating, and abusing them.

Posted by: d.a.n at November 17, 2006 7:23 PM
Comment #195519

Adrienne, good summary. Friedman’s genius was in number crunching predictability. In developing models which under specified environments would fairly accurately predict certain market outcomes, he was a genius, and in that area he was lauded and awarded.

His philosophy however, whose premises are born out of Adam Smith’s concept of an informed and rational public making purchase and investment decisions from a mental state of “enlightned self interest” rarely matched reality in environments of ever greater complexity and deceptive advertising and sales approaches invested in by most producers and manufacturers.

The American public is capable of making some rational purchase decisions based on enlightened self interest when assistance is provided by neutral parties like “truth in lending laws” and non-profit, non-partisan aid groups assisting Home Buyers for example.

But, Friedman’s philosophy breaks down in areas like consumer credit (a huge backbone of our society) where deceptive marketing and advertising practices have flourished to greater and lesser degrees, undermining educated consumer’s choices regarding credit; not to mention uneducated consumers who haven’t the math skills to grasp compound interest daily.

Friedman’s philosophy breaks down precisely because of his premise ‘caveat emptor’ which demands regulation to provide awareness to the consumer of a useful kind that enhances ‘enlightned self-interest’ in both purchases and government policy. Yet, Friedman insists any regulation would produce consequences of a graver nature than no regulation.

On an a priori basis, Friedman’s philosophy fails in that opens doors to oligopolies, aggregate competitors acting as one monopoly even in an environment where anti-trust rules are in place. In Friedman’s world, the wealthiest bribing government in their self-interest is perfectly acceptable and predictable, and he argues to do otherwise will be worse.

Hence, I find major flaws in Friedman’s philosophy for very practical and real world reasons and consequences.

Posted by: David R. Remer at November 17, 2006 7:44 PM
Comment #195525


Well, Jack?

Posted by: jlw at November 17, 2006 9:09 PM
Comment #195531

Ah,The great tried and true straw man.

While I don’t want to dispute that Friedman was an intellectual and contributor to Economic thought, I will dispute your interpretation of liberal thought, and Adam Smith.

“I thought it was clear that we - collectively- could/should make wise decisions for the greatest good, justice and efficiency. Didn’t fair wages and prices make sense? Wasn’t competition wasteful and profit morally suspect?”

Apparently, you weren’t a liberal in college, but a Marxist. You now seem to confuse the two. Like many reformed drunks, you preach about abstinence. While most of us don’t need to stop drinking completely, because we can moderate, you are convinced the entire world are compulsives (OCD) drinkers.

Which Liberals believe that crap?

“Wasn’t it just true that the rich got rich by exploiting the poor? Galbraith had phrased it so well. Old money came from piracy and war and new money came from exploiting workers and consumers. The rich got richer and the poor got poorer.”

It was and still is true, in large part. That is a simple fact, Jack. The Economic Boat has lifted most parties, but that doesn’t change basic Human Nature.

We still need laws and regulation, without it we have anarchy. My problem with many, who little understand either Friedman or Galbraith, is when they use the term free markets to justify plunder or privatization to discuss what is really corporate welfare and bribery.

While I agree Sophomoric is a term applied to poor understanding, deceptive argument is more in line with Machiavelli, Goebbels, or Rove.

The truth is that neither Friedman nor Smith were against regulation of markets or socially beneficial economic policies, they were proponents of using market forces to resist false economic regulation and anti-competitive laws. There is a vast difference between the two.

I personally think you are misguided by the cult of “conservatism”. Instead of following Icons like Marx, You now follow Icons like Rove and Rush, who falsely claim the title conservatives, when in fact they are far from conservative. We live in an age of Robber Barons. Your icons are paid propogandists for the Barons and their lackeys, Bush, Frist, and Delay. (Oddly, more OCD drunks) While many times you come across as reasonable other times you spout this propaganda.

I have hope you’ll find intervention soon, and treat your new addiction.

I know you always say free markets require laws and regulation for fairness, but too often, Friedman is also guilty of this, it is subtext to the main point you promote. It kinda of reminds me of the “yadda, yadda, yadda” line from Sienfeld. It’s the real point , though. The idea of Free markets becomes sophomoric when you neglect the detail of which pirates take advantage. Free seas are nice, but if you are plundered , you start looking for the navy.

Posted by: gergle at November 17, 2006 10:38 PM
Comment #195538

d.a.n.

I really do not get your point. The man studied money and explained how it worked. He didn’t seem to make any big changes later in life. I suppose, like everyone else his thinking evolved, but there was no breathtaking epiphany in his last years. His whole point about money was that government could not expect to print money w/o discipline. It was not something he discovered late in life.

Gergle

If you want to attack my belief in “pure” free markets why don’t you just write this: Government has a positive role to play in the creation of infrastructure. I also would put a little more emphasis on the rule of law and accept some regulation. Developing country financial markets, for example, need significant regulation. Even ours can use a little some time. Targeted government sponsored R&D was also crucial to the progress of the free market.

That would fix me, or maybe somebody else wrote that before.

Re liberals - If they believe in profits, do not want to regulate to produce “fairness” in wages and if they have learned to love competition, maybe we got nothing to talk about. And if liberals no longer think JKG makes much sense, then we agree.

Adrienne

JKG’s philosophy is certainly more superficially attractive. I remember thinking he was the greatest thing since sliced bread. But at the very time he was expounding his theories, built over a lifetime, on PBS, his world view was crashing down. He contended, for example, that big companies could so effectively control the market that they could never be challenged. His example was General Motors, bad timing in the 1970s. He talked about the equilibrium of poverty in the American south right about the time the Sunbelt was about to displace the rust belt. He said that the influence of individuals on the vast corporate culture didn’t make any difference, about the same time Steve Jobs and Steve Wazniak were growing apples in their garage and when Sam Walton was building creating a new business model in rural Arkansas.

JKG is essentially a socialist. He appeals because his explanations make such sense and are so well phrased. It is the case with socialism and planning in general. It sounds good, but it doesn’t work as well as it sounds.

Friedman talks about the importance of markets and money supply. You need not bring greed into it. Greed is a human emotion that plays a strong role in all human systems. I have seen enough of corruption in government and especially socialist systems to understand that it is not something limited to free markets. The free market, however, provides some choices. If you do not like Coca-Cola, you have other options. Socialism and government control empowers bureaucrats to decide what is best for you.

In Poland times were okay (for a socialist state) during the 1970s. But the Premier at the time just didn’t like bananas. He pointed out that Poland produced plenty of apples, pears and potatoes and that people didn’t really need bananas. He thought bananas were a waste of money, so the bureaucracy made it hard to import them. I guess he was right. But was it his business to make that choice?

It is not possible or desirable to have a pure system of any kind. Purity exists only in the minds of academics and theologians. A free market, which includes market mechanisms, democracy, rule of law and some regulation, is the best system in practice ever created by humans. Some forms of socialism have worked from in small homogenous places for short periods of history, but I can think of no example of socialism (or heavy state control) that has functioned over a large geographical area or a diverse population without excessive coercion and oppression. It just is not scaleable.

You just do better if you give people reasonable amounts of choice and if you do that you produce some inequality and you have to tolerate some degree of failure. The other option also creates inequality, but it is usually hidden and creates a general failure.

Posted by: Jack at November 17, 2006 11:24 PM
Comment #195539


Government sponsored (light state control) corporate socialism seems to be thriving in America and some Americans seem to like it very well.

Posted by: jlw at November 17, 2006 11:50 PM
Comment #195549

Jack:
“JKG’s philosophy is certainly more superficially attractive.”

This to me means you have either never read very much of what he wrote, or you read it so long ago that you have completely forgotten Galbraith’s very well developed and comprehensive philosophy, while steeping yourself in the inhuman garbage of Neocon “intellectualism”.
If this is the case, you’d do well to revisit Galbraith’s works. In my opinion, ‘American Capitalism’, ‘The Affluent Society’, ‘The New Industrial State’, and ‘Economics and the Public Purpose’ are all excellent books. He also wrote a couple of other good books in his later years that I’ve read and can recommend to you. One entitled ‘A Short History of Financial Euphoria’ and another that was only written a few years ago called ‘The Economics of Innocent Fraud’.

In my opinion, JKG was a truly brilliant man that understood that the standard mathmatical models that economists use tend to neglect too many factors. This is exactly what is so horribly wrong with Friedman’s philosophy. As David mentioned earlier, Friedman was quite the number cruncher, but the problem is, like all Neocons, Friedman always had to make his numbers fit his preconcieved ideas and goals. This is not the case with JKG, who really was as much a political economist as he was a classical economist. Really, the fact that you’re claiming Galbraith was superficial really says a lot more about you, than it does about him.

“JKG is essentially a socialist”

There’s that word again — it must be injected into every reply to me it seems, and as usual, I consider that seemingly all-purpose label complete BS. If JKG is to be labeled essentially “a socialist”, then Friedman must be viewed as essentially anti-social, since it is clear he had no use for the average citizen or the public good, because he was only working on behalf of the richest Americans.

“Friedman talks about the importance of markets and money supply. You need not bring greed into it. Greed is a human emotion that plays a strong role in all human systems.”

Galbraith wanted something better for this country. He knew that because of our affluent society, business was using advertising to create an artifical market, where people artificially believed they needed things that they don’t need at all. He saw and understood that this was happening back in the fifties, and obviously this has only grown and become more and more of a problem for this nation. He also talked about how the public good was being neglected, and that the real needs of the people were going to be totally ignored if we didn’t take another approach. And he was right, because these days, people spend more time at their town and city council meetings trying to fight off the new giant Walmart or other big box store that’s coming than they do addressing how they’re going to clean up the pollution in their lakes and rivers and streams.
Galbraith talked about a program that he called “investment in men” — it was to be a government education program that could influence the desires and the tastes of the American people and combat the onslaught of advertising and the insane desire to fill artificial needs. He hoped that we could one day see “a new class of citizen” that might grow from this program that would place “its emphasis on education and its ultimate effect on intellectual, literary, cultural and artistic demands.”
Galbraith was interested in making this country economically and intellectually a better place for all Americans, while Friedman was only interested in making money for a single segment — the fatcats.

Posted by: Adrienne at November 18, 2006 1:37 AM
Comment #195553

Adrienne, dead on right! Read my reply to Jack in his newest article after this one, Nov. 17 Sources, Economic Freedom for All.

Galbraith recognized that economic poverty is a consequence of mental and emotional poverty from childhood, and that education and demonstration of each child’s worth in a school system that values and demands mental and emotional potential in young children be developed, is how you break the cycle of poverty.

Posted by: David R. Remer at November 18, 2006 4:31 AM
Comment #195555
Jack wrote: d.a.n. I really do not get your point. The man studied money and explained how it worked. He didn’t seem to make any big changes later in life.

Jack,
Friedman advocated a fiat-money-system all along, until much later, he modified his viewpoint. Friedman states in his own book (in 1994) that uncontrolled money growth (i.e. excessive money-printing) is the cause of inflation, and has many bad side-effects, such as eventual economic instability and unemployment. In his book “Money Mischief”, Friedman devotes a LARGE part of the book to the problems of a fiat-funny-money-system that is NOT linked to any commodity of any kind.

That is Friedman’s epiphany. He doesn’t call it that, but it’s not a mere evolution, because Friedman does a complete 180 degree turn-about.

And that sums up my point. Friedman changed his mind about currency backed up by something versus nothing. His own book exemplifies this switch as he explains (at great length) the problems with a fiat-funny-money-system and money that is NOT backed up by something of value. And, that very problem stated by Friedman is supported by the massive increase of inflation since 1800. It was fairly stable UNTIL the switch-over to a fiat-funny-money system started in 1913. Also, many more problems arose when many nations switched to a fiat-funny-money-system too, not to mention the destabilizing effects it has.

In my opinion, those that advocate a fiat-funny-money-system (currency backed up by nothing), and manipulation via a 3% to 5% rate of inflation, is either rooted in arrogance and/or greed. To really understand why the dishonest fiat monetary system is so popular among some economists, the business community, bankers, and government officials, you need to understand how it gives them the power and influence to put money in their hands, FIRST, early in the circulation cycle, before the currency loses value due to the insidious, ever-present, intentional inflation. This unethical and dishonest system shifts the loses to others that don’t understand how they are being used. It erodes their savings and creates bubbles (e.g. stocks, real estate, gold, silver, etc.) as people flee from one thing to another looking for someplace to evade the erosion.

Posted by: d.a.n at November 18, 2006 9:18 AM
Comment #195560

JKG was a Fabian Socialist. That’s all I need to believe his theories are for no good.

Posted by: tomh at November 18, 2006 10:24 AM
Comment #195563

d.a.n.,

While I agree that money supply increases can become inflationary and a hidden tax, increases in money supply that are corelative with growth in GDP are not. We have a larger money supply than in 1800 largely due to a larger economy.


Jack,
My point isn’t that you aver for Free Markets, but that you act as if we do not have that in America. We have oodles of that here. You rail against regulation when we clearly have markets that are rife with monopolistic and unfair practices. Hiring illegals for example, tax laws that encourage exporting production, so called deregulated energy markets that have become write your own check free-for-alls to captive consumers.
Yet you rail against regulation like Don Quixote skewering windmills. The game is the same game that was played in the inheritance tax issue. The only beneficiaries were the super wealthy. Yet to hear the Republican propogandists rail against the “Death Tax”’ you’d think they were gonna charge Ma and Pa Kettle’s kids a fortune.

Posted by: gergle at November 18, 2006 10:49 AM
Comment #195567

tomh, and Islamic Fundamentalists label westerners as Christians and on the basis of that label alone, justify killing them like vermin.

I don’t think Galbraith was a socialist at all. He was an advocate for the very system we have now, a mixed economy in which free enterprise is encouraged but with limits that answer to the nation’s health and needs, such as wealth redistribution which maintains a huge consumer middle class and prevents the kind of out of control debt that Republicans have created.

Do you realize there is 100+ billion a year to be recovered from discretionary spending waste, fraud, and abuse alone. And don’t worry, I and millions of voters will be holding the Dem’s feet to the fire on reining that in, just as we did with Republicans on Nov. 7.

The economy whose biggest single entity spender is the government, should serve the nation, not the wealthy at the expense of the nation. That is the difference between Galbraith and Friedman. You can call Galbraith socialist for it, but, I call it patriotic duty to serve the needs of the nation’s future first and foremost. And our nation’s future depends directly upon ending the deficits while simultaneously investing in education of the next generations in biggest way possible just so we can stay competitive with China, Japan, India, Malaysia and host of others who are positioned to eat our future’s lunch and dinner for us.

Posted by: David R. Remer at November 18, 2006 11:23 AM
Comment #195571

Adrienne

JKG is a brilliant man. He is very entertaining. But he is an artist, not a person describing reality. I read most of those books you mention many years ago. I do not believe I will go back to them now. Much of what he wrote was simply OBE’d. Those corporate powers he talked about (remember GM) just didn’t have the power he thought. I do not think anybody can predict in detail something so complex as the economy and I do not hold him to an impossible standard, but most of the events since 1960 have not been in line with his prediction. His assumptions about GM were wrong before his book even hit the bookstores. The test of any theory is its predictive power.

JKG is essentially a socialist. I do not mean that in the pejorative sense. It is just descriptive. He believes in heavy government regulation and management that amounts to ownership. That is socialism. I think socialism is just fine in small homogenous groups. It is dangerous in a diverse society or one that has a strong army or police force.

JKG wanted something more, but he cannot have it. He wants a new class of men. Sound like anybody else you know?

Humans can behave better or worse and the society they live in makes a big difference. But you cannot eliminate greed and selfishness. People who are greedy and selfish in another’s eyes rarely see it that way. One of my neighbors enjoyed a significant appreciation of his home. He sold it at a profit and thought it was just his right. Now he is complaining about the greed of those selling the houses he wants to buy and this is AFTER the market has softened.

We need decent institutions to control – and channel - human emotions such as greed and aggression. The free market tends to provide it. You also need rule of law and some regulation. We are not talking on/off, but degrees. I trust government less than you do.

Re investment in men (again) we all want people to be better and have opportunities. The question is to the extent that society and individuals can do it and how much government control we want. I do not think JKG was any more interested in this than Freidman. They wanted to use different methods. I suppose we could only make an estimate of their personal commitment if we looked at how much of their own time and money they devoted to social good.

Besides all this, you know you like JKG because he is Scottish.

Gergle

Regulation is like medicine. Some is good; too much is poison.

I do not really have a problem with the “death tax” in practice. In theory it is double taxation and it implies the all the money in the country really belongs to the government.

But in practice, the death tax doesn’t work well to get at the rich. I recall that the Kennedy’s mananged to avoid it almost entirely when old Joe took the road to glory. The super rich can avoid it or do not care. If you make it high enough to encompass the average sized farm or business that a person might leave to his kids, I will support it. BTW - that will be a bigger number than the average business, since presumably these are the businesses that survived a lifetime.

Posted by: Jack at November 18, 2006 11:44 AM
Comment #195574
d.a.n., While I agree that money supply increases can become inflationary and a hidden tax, increases in money supply that are corelative with growth in GDP are not. We have a larger money supply than in 1800 largely due to a larger economy.

gergle,
Yes, BUT it is mostly due to excessive money-printing, as evidenced by the huge jump in inflation since we started switching to a fiat-funny-money system in 1913. Look at the inflation since 1913.

Also, note that money-supply grew by a factor of 52 since 1950 (i.e. from $135 billion in 1950 to over $7.11 trillion in 2000)! That’s 5200% !

However, the nation did NOT become 52 times wealthier (i.e. 5200%) since 1950, even though the U.S. population grew by about 53% (i.e. from 152 million to 282 million).

The point is, inflation is destabilizing. It creates bubbles and instability. It erodes savings. It’s nothing more than counterfeiting. But, it’s not hard to understand what motivates some to it. Especially those that get to spend it first, before it loses value. And, governments try to use it to shrink debt. In my opinion, the whole scheme is dishonest and damaging. The ever-present, intentional inflation also hammers the the poor the most, eroding their retirement savings and/or fixed incomes.

Posted by: d.a.n at November 18, 2006 12:24 PM
Comment #195579

Jack:

“It is the case with socialism and planning in general. It sounds good, but it doesn’t work as well as it sounds.”

This comment sums up Friedman and free marketism as well. Except, it doesn’t sound all that good, either.

“Besides all this, you know you like JKG because he is Scottish. “

I thought he was Canadian.

Posted by: Tim Crow at November 18, 2006 1:00 PM
Comment #195582

Tim

Canadian of Scottish ancestry. He used to bring it up. I am just giving Adrienne a hard time. It is not a key point.

Nothing works as well in practice as in theory. We have to judge the theory by its predictive power and choose how we want to run things not by the promises of the perfect but by what it looks like in its corrupted worldly form. The free market mix has consistently produced better results than its alternatives in situations like ours.

If I lived in a small, homogeneous society where change was slow and incremental, I would prefer socialism. It is nice to have the predictability it provides. But the trade off is lost innovation and lack of choice. In our real world society socialism is a quaint idea of the past (in its democratic small scale form) or a fierce destructive force (in its bigger revolutionary manifestations). In either case, it does not apply these days.

Posted by: Jack at November 18, 2006 1:43 PM
Comment #195589

“The free market mix has consistently produced better results than its alternatives in situations like ours. “

For whom?

“If I lived in a small, homogeneous society where change was slow and incremental, I would prefer socialism. It is nice to have the predictability it provides.”

Posh! Free market capitalism is imminently predictable—the rich don’t get richer, they get obscenely, unbelievably richer. And the poor eat Yo-Yos and Big Macs and pine for those long-ago halcyon days of welfare queens driving Cadillacs. And the middle class? Their yearnings for something predictable, like whether their job will be around next month, or funding for their kid’s college education, well, this is just plain ignorance. The spoils go to investors who take risks, who innovate, who embrace the crisp air of market forces and forge their destinies in the stars! Predictability is for losers. And accountants.

Never mind that most of the risks these ‘investors’ make aren’t risks at all. And I think this country’s thirty year conservative ‘revolution’ has done an excellent job of socializing the risks and the costs and privatizing the profits.

Posted by: Tim Crow at November 18, 2006 2:44 PM
Comment #195592

David, thank you, and I agree with you wholeheartedly, both in your replies to tomh and myself, as well as to your reply to Jack in his other thread.

Jack, I disagree with you completely. What’s more, despite your claim of having been liberal in your youth, I don’t think you ever actually were. Because clearly you’ve never fully grasped or truly appreciated the mind of a progressive thinker like Galbraith — or myself, for that matter. In true Neocon fashion, you constantly and falsely use the word socialism in an attempt to demean liberals you don’t agree with — but I can see right through this tactic. It’s a way to avoid the larger topic of what constitutes a healthy economic outlook as opposed to one that simply makes the most money for those who can manage to grab hold of the brass ring. I see very clearly the motive of people who are so taken with the Neocon philosophy. Despite how harmful their ideologies have been the nation, that philosophy has only been about helping a small but select group to make a big pile of money for themselves, while taking advantage of our entire society.
The truth is, it’s very easy and so seductive for individuals to make money when one doesn’t have a shred of feeling for other people, or any semblence of a social conscience, or thoughts regarding the future. But things that are good are often much harder to achieve than those that are easy. Galbraith’s economic philosophy, because it saw the larger picture and took many more factors into account, including what would be better for the majority of our citizens, is one of those good, but harder paths that lead to a healthy and prosperous destination, while Friedman’s is the easy and selfish and harmful path that only a few may take, and one that avoids looking at it’s future destination entirely.

Jack:
“Besides all this, you know you like JKG because he is Scottish.”
Tim:
“I thought he was Canadian.”

Yes, Galbraith was Canadian born, of Scottish descent, and became a US citizen. But Jack’s comment is ridiculous. I like Galbraith because his economic theories were very wise and intelligent, not because his blood was Scottish. And while I am an American of Scottish descent on one side of my family, I also happen to be married to an extremely intelligent American of Jewish descent — like Friedman. Though I must say, my liberal husband is a much wiser and better man than was Friedman, and lucky for me, Himself is a hell of a lot better looking, too! ;^)

Posted by: Adrienne at November 18, 2006 2:59 PM
Comment #195593

Well said, Tim!!!

Posted by: Adrienne at November 18, 2006 3:01 PM
Comment #195601

Adrienne:

[to Jack]

“…you constantly and falsely use the word socialism in an attempt to demean liberals you don’t agree with …”

Wait a minute! You mean, I’m not a socialist?!


(mumble, mumble):-)

Posted by: Tim Crow at November 18, 2006 7:00 PM
Comment #195606

Well Tim, while you’ve stated up front that the term does actually apply to you, it doesn’t happen to apply to Galbraith. To Jack, and many other Friedman-loving, free market and corporate-worshipping righties, it’s usually a dismissive tactic to call someone socialist whenever they believe that government can be made to do anything at all effectively. And as you well know, there are others in these columns who will go so far as to use this term on anybody whose political views are merely to the left of their own.

Posted by: Adrienne at November 18, 2006 8:13 PM
Comment #195622

Adrienne

I was joking re the Scottish thing. I just do not like to use those little smiles.

I do not see the world clearly demarcated ideologically. People call themselves lots of things, but no definition can encompass all the practical things we have to do to run a society. I judge things by what they seem to do. American left liberals such as Galbraith seem to behave a lot like democratic socialists in the European sense.

I know the term socialist is loaded, since it includes such a variety ranging from social democrats to Nazis to communists. I stipulate that these groups often have little in common except their distrust of the free market, but if we are describing attitudes toward the market, it makes sense to use the term.

When I lived in Norway, one of my favorite friends was a leader of the Socialist Left Party. We disagreed completely re how an economy should be managed and most aspects of international security, but our attitudes about most other things were remarkably similar. Politics doesn’t define people most of the time, but when it does you have to call it what it is.

JKG defined the role of government in such a way that it fundamentally took away the rights of people to use their property. He advocated a significant role for the government in planning the economy and picking winners and losers. You can call it what you like.

Re my own background. I do not know that I was ever a liberal. I do not have the liberal temperament. But when I read JKG for the first time, l believed what he said. As a sophomore I gave a speech advocating socialism. It was not a very good speech. It is hard to make a case for socialism, but I did try. I was objectively poor and from a working class family and I didn’t have any particular prospects or connections. That is what I was then. You can also definite it as you like.

Tim

In a free market some people get rich. Most people get better off. But it is unstable for rich and poor alike. The richest 20% make a lot of money, but the membership in that group changes a lot. Most of the big fortunes in the U.S. are new money, which I define as younger than I am. Look at your favorite products and ask yourself how many are made by firms that were making things like that on the day your were born. Beyond that, we do not respect rich guys who do not work and we have to constantly adapt our business practices. That makes people feel insecure.


Posted by: Jack at November 18, 2006 10:19 PM
Comment #195652

http://www.economist.com/daily/news/displaystory.cfm?story_id=8190872&top_story=1

http://www.nytimes.com/2006/11/19/opinion/19summers.html
Interesting comments from to very liberal sources.

Nice work Jack. Others can say they are not socialists in the true sense, but if it walks like a duck….

Why does it seems there is always so much hatred and envy in most of the anti Friedman rants? Ultimately we are all responsible for our own success and failure. Hurdles may be placed, either jump over them, walk around, or stand there and complain about the hurdle. Simplified? Perhaps, but most of us with an ounce of ambition will find a way around any obstacle placed in our way. Most of the negative posters here seem content to whine about “the unfairness” of it all. Move out of the way if you have nothing constructive to contribute. You are slowing the rest of us when we have to step around, or over you. I’ll offer a hand as I go over. Take it or stay and complain. Your choice. I’d love to hear Adrienne’s definition of selfishness and greed. (I’d almost pay)

Posted by: InfoMan at November 19, 2006 9:57 AM
Comment #195727

“Others can say they are not socialists in the true sense, but if it walks like a duck….”

Then again, maybe you don’t know a duck from shinola.

“Why does it seems there is always so much hatred and envy in most of the anti Friedman rants?”

And why is it you Neocons always assume that people who don’t agree with you are automatically grudge carrying losers with little money and no careers? It is beyond ridiculous. Believe me I am very far from either of those things, I but I do happen to be a liberal who was taught right from wrong, to treat others as I wish to be treated, and one who worries over the future of my country when souless crooks like the Neocons (of which Friedman was one)are in charge.

“I’d love to hear Adrienne’s definition of selfishness and greed.”

Oh, yeah? But why should I bother to tell you anything at all? You’ve not even tried to be amusing or engaging, or interesting the way that Jack does. You see, that’s why I reply to him — that, and the obvious fact that seems to enjoys my opposing comments for the same reason. You righties who blog only to sneer at liberals really do slay me sometimes.

“(I’d almost pay)”

Well maybe you should take a moment to consider that money can’t buy you everything. Things like respect, or goodwill, for instance.

Posted by: Adrienne at November 19, 2006 6:40 PM
Comment #195846

Why did you respond then? It really gets under your skin doesn’t it? You claim to have been taught right from wrong but you won’t tell your version of greed or selfishness. That tells me all I needed to know. You are at least aware enough to know I would destroy your definitions. I don’t care what your social or financial situation is. Why do you assume anyone does? I do care that you
and others like you,think you have a ‘right’ to my money. Money I have earned, not you. Support all of the so called ‘unfortunate souls’ you want. Don’t try and take my money to do it by force.
Adrienne, you are so compassionate. Saying you wished Friedman should not rest in peace in your mythical afterlife. Calling him a crook. Evidence please. Your name calling and attitude tells more about you to those paying attention. Jack tolerates you and makes you look foolish with subtlety. I get it. Do you? One of the sayings that Friedman used often was “there is no such thing as a free lunch” Try and disagree with that.

I am not surprised leftists with socialist leanings (sorry for the redundancy) call Friedman transparent as far as basic humanity goes. A majority of leftists believes that we are here to help others. Fine. What are the others here for?

Is it my fault that someone can’t make enough to pay their rent? If not, whose fault is it? Simple questions. I could go on for a long time but that would become tiresome. Why do you believe the government is the answer to all of the problems you state? Saying that Friedman only helped the rich is disingenuous, and absolute lunacy if you really believe it. Class warfare is extremely tiresome as well, but it is something you bring up in almost all of your posts. Ever read Horatio Alger? Why are there countless examples of rags to riches stories? More importantly why does that bother you so much? (Introspection can be a wonderful thing) We all make choices everyday. Some have advantages, some don’t. Some take advantage of opportunity. Some don’t. Some become obsessed with writing on blogs and forums. Some even get so upset they resort to name calling. “Neocons” is just one of the many you throw out. I am a Libertarian for your information. I have been for 15 years. What are you? Really. Be honest with yourself. What would you really like to see as far as our government leadership goes? I can’t wait.

Posted by: InfoMan at November 20, 2006 10:30 AM
Comment #195881

Here is a Friedman quote that to me summarizes his belief about the economy and the federal government.

“Given our monstrous, overgrown government
structure, any three letters chosen at
random would probably designate an agency
or part of a department that could be
profitably abolished.”

Posted by: tomh at November 20, 2006 1:59 PM
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