Blog archive from the golden age of London libertarianism
John Redwood, Niall Ferguson, Deepak Lal, and Richard Epstein form the panel and this event reflecting on and evaluating Milton Friedman’s impact 100 years after his birth.
The panel will cover his :
The CPS panel meets in the Guildhall in the City of London on the evening of Tuesday 3 July. Full details are on the CPS website.
No one is perfect – and one can certainly attack Milton Friedman’s position on monetary policy (essentially he fell into the same errors as Irving Fisher – not a surprise as Milton Friedman considered Fisher the greatest American economist of the 20th century).
Sadly none of the four members of the panel will (for example) understand that Benjamin Anderson (head of the New York Federal Reserve) did NOT do a good job in the 1920s – on the contrary, Ben Anderson was the man most responsible for the build up of the credit money bubble of the late 1920s that INEVITABLY ended in a bust.
What Fisher (and Milton Friedman) never understood was that even if the “price level” is not going up an inflation may well be occuring. Indeed to think of inflation in terms of the “price level” and “price indexes” is WRONG – inflation is the increase in the money supply (for example by the lending out of “money” that no one has really saved), and every credit-money “boom” must end in a BUST.
Also one can attack Milton Friedman’s opposition to “right to work laws” (laws to prevent COMPULSORY union membership). In an ideal world employers would be allowed to (if they wished) insist on compulsory union membership (although this would be an odd thing to insist upon) – but the world is not ideal, PRO UNION LAWS push in the direction of complusory union membership, right to work laws (for example most recently in Indiana) act as counter balance.
Also Milton Friedman’s support for the “Negative Income Tax” (welfare – whether you call it the “earned income tax credit” or “tax credits” or whatever) was mistaken.
It is resonable to expect an academic (such a the late Milton Friedman) to go to work even if they could eat just by sitting at home – because they love (or at least do not hate) their jobs. But vast number of people hate their jobs – to them work is a nightmare of mental pain and humilation (this has always been the case). It is not reasonable to expect these people to go to work if they can eat WITHOUT going to work.
This Milton Friedman never really understood – the disutility (to put it in polite language) of work is something he never really grasped (as he loved his work). The idea that unless people risked hunger (and that their families risked hunger) vast numbers of people would not work – was something he, therefore, could not grasp either. The practice that if people earn a bit more money because they go to work than if they do not, will not work on people to whom their jobs are a source of intense anguish – and there are (and always have been) vast numbers of such people.
So, unless you want a growing underclass of welfare people, you will NOT give people money for doing NOTHING (whether you call the welfare spending a “negative income tax” or whatever). Saying “but we will put things in place so that they can earn twice as much by going to work as by staying at home” will NOT be enough (because it does not take account the very high level of disutility that comes with vast numbers of jobs).
Still that is quite enough of attacks on the late Milton Friedman – for every page of attack there could (and SHOULD) be a chapter (indeed a book) of praise.
So go along to the event and listen to N. Ferguson (and so on) praise Milton Friedman.
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IIRC the Workhouse was specifically designed to be less attractive than the worst job there was, with the intention to ensure that worst job was done if it could possibly be secured, otherwise the Workhouses would be full and the worst job lie vacant.
Yes, you can say “then pay the worse job a higher rate”. That makes sense in a world without welfare, for then it would attract just enough people, but when it competes with welfare, it has to be significantly higher than welfare. It becomes not a race to the top, but a stampede to a cliff where multitudes fall off, being unable to justify the cost of their employment, unable to pay the cost of labour competing against the very money taken from them in tax. They in effect, are forced to out-bid themselves. The taxpayer is robbed twice and the Socialists take their cut both ways, upside and down.
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