Milton Friedman - Friend or Foe?
We all like the mainstream of Friedman's arguments for capitalism, competition, and the free market. That said, it must be explicit that he was not a consistent advocate of laissez faire. For one thing, he supported anti-trust laws as necessary to prevent excesses.
On a deeper theoretical level, he proposed a "monetist" theory of government finance, which is alluring in its siren-song of a balanced budget and a hard currency, but the rocks to which he is drawing you are still a government that "adjusts" interest rates and business activity (your life) by adjusting its "monetary policy." Interviewed for The Library of Ecoomics and Liberty he said, "I've always been in favor of abolishing the Federal Reserve and substituting a machine program that would keep the quantity of money going up at a steady rate."
http://www.econlib.org/library/Columns/y...
Now, how do they determine the right rate? And why should the money supply always expand?
Contrary to Friedman, Ludwig von Mises and F. A. Hayek led the Austrian school in their advocacy of a completely free market in money.
Friedman suggested a "negative income tax" to put a floor under the poor. A suggestion similar also came from Hayek who argued that an abundant society should have no problem seeing to it that everyone has the basics. You might disagree with them both, but Hayek was vague in his proposal - it was not a key issue for him. Friedman suggested this when he was Barry Goldwater's economic advisor in 1964.
Here he is on William F. Buckley's "Firing Line" in 1968:
http://www.youtube.com/watch?v=xtpgkX588...
This tinkering with income taxes was based on his own work in World War II when he helped to create income tax withholding as a way to get the most money with the fewest squawks.
http://www.aei.org/article/economics/fis...
This is just one of many concrete examples of why Objectivists are NOT "conservatives," but, rather, are "radicals for capitalism."
On a deeper theoretical level, he proposed a "monetist" theory of government finance, which is alluring in its siren-song of a balanced budget and a hard currency, but the rocks to which he is drawing you are still a government that "adjusts" interest rates and business activity (your life) by adjusting its "monetary policy." Interviewed for The Library of Ecoomics and Liberty he said, "I've always been in favor of abolishing the Federal Reserve and substituting a machine program that would keep the quantity of money going up at a steady rate."
http://www.econlib.org/library/Columns/y...
Now, how do they determine the right rate? And why should the money supply always expand?
Contrary to Friedman, Ludwig von Mises and F. A. Hayek led the Austrian school in their advocacy of a completely free market in money.
Friedman suggested a "negative income tax" to put a floor under the poor. A suggestion similar also came from Hayek who argued that an abundant society should have no problem seeing to it that everyone has the basics. You might disagree with them both, but Hayek was vague in his proposal - it was not a key issue for him. Friedman suggested this when he was Barry Goldwater's economic advisor in 1964.
Here he is on William F. Buckley's "Firing Line" in 1968:
http://www.youtube.com/watch?v=xtpgkX588...
This tinkering with income taxes was based on his own work in World War II when he helped to create income tax withholding as a way to get the most money with the fewest squawks.
http://www.aei.org/article/economics/fis...
This is just one of many concrete examples of why Objectivists are NOT "conservatives," but, rather, are "radicals for capitalism."
Was Milton Friedman a politician? As an economist, he was supposed to have been a scientist. His activity in government certainly did make him political, but does that then excuse him from the standards for science?
I went to the Money Masters link. "Friedman was in favor of abolishing the Federal Reserve System and replacing it with a mathematical model that would keep the quantity of money increasing at a steady rate, issued directly by the government (Treasury) and ending fractional reserve banking powers for the banks..."
It is not up to the government to create the money supply. It is not up to the government to increase the money supply. Fractional reserve banking is just a business policy. In a truly free market, some banks might follow it, others not. Have you read _The Denationalisation of Money_ by F. A. Hayek?
Anarcho-capitalist Murray Rothbard also declaimed against fractional reserve banking and called for 100% gold banking. Again, it is not up to him to decide for every bank how to organize their business. Hayek pointed out that some banks might issue notes backed in the notes of other banks. You might avoid them, but they could be just as sound as any corporation that sells common stock to the public, holds its own and the stocks of other corporations, and of course, cash on hand.
F. A. Hayek warned about the conceit of knowledge. Friedman was given to it.
It is not my idea, another Objectivist pointed out that in prescribing what is best for "everyone" many self-styled "libertarians" are just another kind of central planner. Friedman was one of them. He said a lot of nice things about capitalism ... and continued to plan for everyone else.
Ayn Rand warned us not to expect our politicians to be 100% in line with our thinking, and that applies here.
Not to mention that any truly intellectual person can, and will, revise their core beliefs with time (and experience).
If we seek perfection, then we will have nobody to look up to....
Here is a video from the late 70s regarding anti-trust:
https://www.youtube.com/watch?v=vMvVmlDN...
and this on the Federal Reserve from the Money Masters:
"He said he actually would “like to abolish the Fed“, and pointed out that when he wrote about reforming the Fed it was simply his recommendations of how it should be run *given that it exists*. Though opposed to the existence of the Fed, Friedman argued that, given that it does exist, a steady expansion of the money supply was the only wise policy, and he warned against efforts by a treasury or central bank such as the Fed to do otherwise."
cite: http://www.themoneymasters.com/the-money...