Sunday, November 19, 2006

Remembering Milton Friedman

Iain Murray has a superb tribute to the late great Milton Friedman HERE.

16 comments:

Praguetory said...

Iain Murray - you're a legend.

hatfield girl said...

No-one can deny the greatness of Milton Friedman and the importance of his contribution to economics; he and Maynard Keynes stand like two opposed poles of explanation for the causes of inflation and how it should be controlled and, assuredly, each would concede the validity to some degree of the other's standpoint more readily than many of their disciples. It would be nice though if the work of Anna J. Schwarz in her longterm academic and intellectual collaboration with Friedman, beginning in the '20s and '30s with their monumental study of money supply in the United States , were to be acknowledged by Friedman's adulators. On her meticulous empirical work Friedman and she built the theories that have altered the practice of economics in so many countries and provided a libertarian, non-statist means to control inflation. Mrs Friedman, too, in Freedom to Choose, made an equally important contribution to the other strand of friedmanite economics with its emphasis on private choice not public choice.
As with the work on the discovery of the double helix, the women on the case pass relatively unnoticed. Just wanted to even things up a bit.

JohnWheatley said...

I read yours and other Tory blogs to reaffirm my faith that I will do my damndest to prevent you ever running the country again. Because behind the mask of the seemingly nice Mr Cameron, the Tory Party is still unreconstructed and Thatcherite. Incidentally this blog has become increasingly so over the last few months.

Applauding Milton Friedman's monetarist theories is just more evidence of the above. It took until 1986 before the Thatcher government realised it was tosh, yet it is those seven years that Tories most applaud as her heyday.

The Monetary Policy Committee - the biggest single Labour success and opposed by Ken Clarke at the time, runs the economy in a devoutly Keynsian manner.

A better comment about MF would be "Great in theory, crap in practice", which is the Labour view of Marx, Benn and even Crosland.

Neil Craig said...

Iain urray makes a point of the role of the unions in the 70s economic troubles.

It is worthn pointing out that under monetary theory the unions, pains in the posterior though they may have been, were in no way responsible for inflation. It was centirely due to printing money. The unions were thus only trying to maintain their member's position.

This is a point on which Thatcherism & monetarism differed & it would perhaps be unifying for society if this were acknowledged.

Dr.Doom said...

I doubt Friedman will be remembered in the longer term as being correct.

Controlling inflation via an independant BoE with guidlines from the CPI is a calamity being unfolded before our eyes.

Controlling inflation by dubious satistics is not controlling house prices and in turn the debt allowed by it.

This country's personal debt is now above £1TN and is almost maxed out and certain to call for a relapse.

It is a pity that weaklings continue this homage to names and not causes and is a further pity that simplistic issues such as lack of housing could cause those on the wire to become personally bankrupt so very easy.
The answe to counter inflation lies with authorities being able to meet a housing shortage by building houses that people can afford or rent.
Inflation is now seen to become unmanageable if housing is in the hands of speculating estate agents on a commission.
Britain will rue the day that the money supply bypassed simple manufacturing and passed it to a foreign source that paid poverty wages.

The fall of Thatcher was no mistake but the lessons have not been acknowledged or learned.

Labour claim independance for the BoE is the key.
No chance. It's a con to run a Country on debt.

Doom.

Hayek's Grandad said...

If only the conservative party had the guts to listen to what he said on drugs and dare to try and understand.

hatfield girl said...

"The Monetary Policy Committee - the biggest single Labour success and opposed by Ken Clarke at the time, runs the economy in a devoutly Keynsian manner. "
Mervyn King's early economic training might lead you to expect that, but it isn't true. Were the MPC keynesian it would not have raised the interest rate to 5% in a futile attempt to hold down house prices which are notoriously impervious to interest rates (except when interest rates are at catastrophic levels), and grow with the average wage, regardless of interest rates. The jeopardising of manufacturing, exports and and employment through an over- valued exchange rate that can only please the city , and the threatening of households with default and bankruptcy on their consumption loans is not friedmanite; Friedman and Keynes would be horrified at this clumsy neoclassicism of the most unreformed and primitive kind, which will lead to the destruction of swathes of the economy at the most personal and vulnerable levels. Doom indeed.

Neil Craig said...

House price rises are not a sign of market failure. they are the inevitable result when planning regulations prevent us building houses at more than the replacement rate while population rises.

In a free housing market house prices would be under, probably well under, half the present rate.

Dr.Doom said...

Hatfield Girl has made a very valid point of exchanges. The exchange rate for Britain is in a destructive position and helps no-one exporting.

Britain, it is alleged, is an exporting Nation.

So we do everything we can to foil it?

Not so France.

France is at this very moment threatening to enact a tsunami decision to bypass the ECB and enact its own interest rates to suit France and the EU.

This is allowed in exceptional circumstances and will be very big news indeed if such a course is undertaken.

The BoE and ECB are looking at inflation alone and are wrong in doing so.

Doom.

David Lindsay said...

Neil Craig and Hayek's Grandad are both right, each in his own way.

Neil Craig is just plain right, although of course Thatcher's campaign against the unions, and thus against the industries that most sustianed them, had nothing to do with economics: it was political, but for some reason she felt that it could not be debated politically, and so had to be given a veneer of economic "inevitability" (a Marxist concept anyway). Which says a great deal, really.

As for Hayek's Grandad, indeed you cannot have a "free" market in goods and services generally but not in alcohol, drugs, gambling, prostitution or pornography. Nor can you have such a market and hope to conserve, say, national sovereignty, or agriculture, or manufacturing, or small business, or family life, or local variation, or mass political participation with a constitutional framework, or...

So, can someone please explain to me what was conservative about Friedman, or indeed Hayek, or indeed Thatcher? It strikes me as the very last adjective properly applicable to any of them.

Hayek's Grandad said...

David - have you read Hayek's 'Why I am not a conservative' it explains some of what you ask I think. Although it applies less to Friedman perhaps.

Interesting reading anyway IMHO

http://www.liberalvalues.org.nz/index.php?action=view_article&article_id=246

Anonymous said...

When are you going to decide what you actually believe, Iain?

Do you support David Cameron, who wants to believe in interfering in the price of milk, or do you want to support Friedman?

Iain Dale said...

i doubt very much whether David Cameron has said anything of the sort. The reason I linked to Iain Murray's post is because he says it so much better than I ever could.

David Lindsay said...

Oh yes, Hayek's Grandad. I know that Hayek did not purport to be a conservative. I just don't understand why anyone who agrees with him does so purport, or why anyone who so purports does agree with him.

Hayek's Grandad said...

David I agree with you entirely. In the past I've never agreed with the conservatives but have sometimes agreed (econimcally if not socially) with the Conservatives. Unfortunately there has not been a valid 'liberal' choice in this country for many years and so I've found myself voting alongside many of the ToryTaliban and therefore labelled a conservative.

Have you also read Madsen Pirie's essay 'Why Hayek was a conservative'? It makes some interesting points but I don't entirely agree with it. Again I think much of it would apply to Friedman, although by no means all.

It's on the Adam Smith Institute site if you're interested.

Dr.Doom said...

In a totally 'free' market, it is impossible to reatain sovereignty or even identity, but the French are certainly trying.

Was Thatcher a Conservative? Never thought about this one really but I enjoyed the thought that she wasn't. She along with Reagan believed that markets solved everything. The rich will get richer and the poor would benefit by the benevolence of the rich.

I don't believe that actually happened. Thatchers greatest moments were under Lawson who made money freely available. Easy mortgages and easy lending in General. All doomed to kill any chance of success for Major.

Payback time always comes around and the rich buy themselves out of trouble and the poor pay for it.

Was Thatcher a Conservative? A great question. Proof is if she paid the subscription but reality would suggest that she was a rich mans Tory, whereas Blair is a rich and poor mans Socialist, deliberately interfering in the marketplace and the public sector to produce equality(PFI/PPP).

A debt always has to be paid and I see no way that the current debt will be. Blairism is doomed and it will do for Brown what it did for Major.

Doom.