R.I.P. Milton Friedman
R.I.P. Milton Friedman
Milton Friedman, Nobel prizewinning economist, died at 94. Friedman was a free market economist who opposed Keynesian economic theory and most forms of government regulation of private markets. He got the Nobel prize for correctly forecasting the stagflation of the 1980s. He was outside the mainstream of economic theory most of his long career at the University of Chicago, but he and his Chicago school associates influenced American economic policy and that of many other countries as well.
Paul Samuelson of MIT used to joke to his classes that "just because Friedman said it, it's not necessarily untrue."
Friedman's obituary in the New York Times ran to a full page, space usually reserved for kings, queens and presidents.
Here is a link to the obit which will give you a quick lesson in post-WWII economics.
Who Was Milton Friedman? by Paul Krugman
- Who Was Milton Friedman by Paul Krugman
This is quite a good article for anyone interested in Milton Friedman or current economic theory.
A Charismatic Economist Who Loved to Argue
Friedman--"Eliminate Medicare, Medicaid, Social Security"
- Friedman was not a Supporter of New Deal Welfare Capitalism
Friedman attempted a revival of Herbert Spencer's discredited philosophy of Social Darwinism.
Larry Summers on Milton Friedman
Duncan K. Foley--"Adam's Fallacy--A Guide to Economic Theology"
Harvard economist Duncan Foley has recently published a book which questions economic orthodoxy or as he calls it "economic theology." Foley maintains that, as is the case with other disciplines, economics has declared independence from rule by religion, custom, intuition or 'speculative philosophical discourse.'
According to Foley, economics has historically suggested what attitudes people should take about our capitalist market system and about moral conflicts accompanying it.
"Economics functions in a theological role in our society to justify the ways of the market to men....Economists are becoming priestly figures, with arcane knowledge and special powers."
Several areas come to mind where free economic doctrine is used to justify pure free market policies. Trade policy is justified by the economic doctrine of comparative advantage, and orthodox economists and trade negotiators of both political parties have resisted proposals to make trade agreements contingent on the adp[topm of environmental and worker rights and safety standards. More and more people are beginning to question the benefits of unalloyed free trade to the American economy. Trade opponents are asking why American workers should be expected sacrifice their jobs to competition from overseas operations of American companies or their contractors where workers work long hours in unsafe conditions in plants that pollute the environment. Another policy long opposed by many orthodox economists is the minimum wage. Their opposition has based not on empirical studies but rather dogmatic, theological assumptions about the behavior of employers in the labor market. More recent studies have brought these assumptions into question. Moreover, voters by a wide margin support the minimum wage.
Executive compensation is another area where traditional economic motivation theory's contribution is being questioned based on results in the past 20 years or so which have seen a huge increase in the compensation of corporate officers, many believe without the corresponding increase in results posited by the theories handed to us by traditional economic theory. Apparently the sky's the limit for compensation needed to motivate corporate CEO's at the same time workers in their companies are expected to work for less and give up their pensions and health care benefits. Some of our leading business handed us the theory that CEO compensation should be more closely aligned with the interests of the shareholders by the awarding of stock options. This may or may not have been a good theory, but in practice the result in too many cases was not so good. Company after company cooked their books to pump the price of their stock to increase the value of their officers' options. And for many, that wasn't enough so they back-dated the options to make sure they were worth more than if the stock was valued as of the date they were actually issued.
Organizational behavior theory says that human motivation in organizations is complex and influenced by many factors not just money as assumed by traditional economic "theology."
HERE COME THE ECONOMIC POPULISTS
- Here Come the Economic Populists
Democratic Party split between economic populists and free trading Robert Rubinites from the Clinton administration