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A few weeks ago, Corvo, apparently representing the insurance industry, posted a diary advocating that Universal Healthcare might not be a solution to our healthcare problem.
His premise for this statement was:

Milton Friedman said so.

MF is the most respected economist of his generation.

So there.

I had several issues with this notion, starting with the feeble argument from authority.  Corvo and I got into a long thread which degenerated into him basically becoming enraged that I didn’t simply swallow his assertion and get on with the agreeing.  I think it’s revealing of right-wing propaganda’s insidious and false nature that most people are expected to bow before authority or gentle bullying.  Right-wingers tend to resort to anger and intimidation if these don’t work.  I’ve seen it all too frequently before when I have the unmitigated gall to talk back to them.

At any rate, I think most Kossacks are aware of the idiocy of attempting to apply free-market principles to something like healthcare which doesn’t bend to those pressures.  So let’s instead talk about Milton Friedman.

First of all, Economics is not a science.  
This from

  1. a branch of knowledge or study dealing with a body of facts or truths systematically arranged and showing the operation of general laws: the mathematical sciences.
  1. systematic knowledge of the physical or material world gained through observation and experimentation.

Science’s knowledge is not in the collection of raw data.  Though this has its merits, a scientist spending his or her entire life simply counting stars would be mocked as a time-waster.  Even a scientist spending his or her life doing nothing more than cataloging stars wouldn’t be of much note.  There are two more steps to the process that gives a science its power.  

Once knowledge has been gathered, a pattern can be observed.  All stars with a certain temperature have lines showing element X in their spectra.  All plants with some and such fiber have gene sequence Y.  Whatever.

Finally there is the magical element of science, the one that frightens Luddites and energizes industry: application.  Observation leads to analysis, analysis leads to prediction, prediction equals control.  Predictions told us, before we’d ever done it, that a precisely-machined arrangement of parts made of Uranium, brought into close contact with each other in exactly the right speed and sequence, could cause that Uranium to spontaneously melt down, or split at the atomic level, and cause a massive explosion.  It was a terrifying discovery, but as the t-shirt says: Science:  It works, bitches.  There is no substitute for a successful prediction in science.  If the prediction fails, as it did famously in the cold fusion case, reality passes judgment.  People move on.  It’s not a question of belief.  Clapping harder will not make your theory true.

So what predictive power lies in economics?  Let’s look at some of the axioms of laissez-faire economics, championed by Milton Friedman.

From Wikipedia

The laissez-faire means that the neoclassical school of economic thought holds a pure or economically liberal market view: that the free market is best left to its own devices, and that it will dispense with inefficiencies in a more deliberate and quick manner than any legislating body could. The basic idea is that less government interference in private economic decisions such as pricing, production, consumption, and distribution of goods and services makes for a better, or more efficient, economy.

So we’re to assume that, left to itself, any market would provide us more efficient healthcare than any government.  Right away we have to question what’s meant by efficient.  If I’m to take this exercise seriously at all, I would assume that either the price would become cheaper, or that the service would become more effective, or a combination of both.  However, there’s a problem with the market as it exists today.  It’s not free.

Indeed, healthcare isn’t a product.  It’s a service.  It’s not made on assembly lines.  It’s made in discrete moments where a knowledgeable person, a doctor, makes a decision regarding what to do, or not do, to a patient.  The payment made for this decision is the fee for an office visit.  So how do we shop around for better fees?

Well, we have to go to our insurance provider.  In 2000, 61.4% of U.S. workers received their insurance from their employer.  Right away we have a problem with freedom to choose.  I don’t know about anyone else here, but when I’m interviewing for a job I think of the quality of benefits as something I can only tangentially factor into my employment decision.  Other factors are salary, work environment, location, and stability of company/industry.  I’m not free to choose my health insurance provider when I have all those other factors to juggle, unless I choose my job entirely based on health benefits.  

Your average free-markethole would at this point chide us gently and say, "Tsk, tsk, you always can choose your employer.  It just depends on what factors you’d like to use."  However, when you work in a specialized industry you may only have one or two choices.  Or you may have none.  There is no "market" for the decision to fall back on.  Tying my decision of job to health benefits deprives me of the ability to vote with my feet when my employer becomes otherwise abusive of his perogatives.
Additionally, this line of argument overlooks a crucial element of the free-market equation: knowledge.  When picking a job I only have the vaguest knowledge of what the healthcare benefit packet will look like once I get it.  I don’t know any employers who allow you to try their insurance before you "buy" it by accepting your job offer.  Maybe Kossacks can enlighten me on this.  Even if that was the case, I don’t know of many employers who keep their insurance rates tied to the employment agreement, because my insurance rates and coverage conditions have mutated wildly from what they were when I originally took my current job.  Does that mean, free-marketholes, that I have to change jobs every time my employer jerks around the insurance arrangements?

Fundamentals of Theory

I’m certainly not a leader on this particular intellectual path, but I think it’s worth pointing out at this juncture that I believe economics to be a junk science.  My reading on the subject has revealed very little in the way of empiricism regarding how economies work.  I’ve seen too many axioms presented as tautologies to take it very seriously.

A fact for you to ponder as I continue: the so-called "Nobel Prize" in Economics that Milton Friedman’s gravitas is supposed to come from – it’s a fraud.  The prize is actually awarded by the Bank of Sweden in the name of Alfred Nobel.  It was not one of the original 5 prizes in Nobel’s bequest, and follows the neo-conservative pattern of hijacking someone else’s marketing success in order to sell a shitty idea.  The fact that economists feel compelled to do this in order to grant themselves "scientific" cachet ought to tell you something about the field’s credibility overall.

I’d like to propose the theoretical grounding for a new way of understanding economics.  Economists attempt to place conditional axioms over human behavior.  I think this is the wrong way to do it.  Instead I’d like to take patterns I’ve learned from computer systems and apply them.  The first complaint I’m going to get is that people are not computers.  That’s true.  But I’ve got a 12-year career in watching people use computers.  If you think of economics as a set of rules much as a computer system has a set of rules, you realize that the desires of the people using it don’t much matter.  The system will behave in a certain way that is predictable because people, as an aggregate, are not possessed of much in the way of free will.  Their desires collide with the system’s possibilities and the result is very, very predictable.  I’ve made a career out of handling the vagaries of the computer system-to-human being interface.

The first thing to realize is that system performance is not spoken of in capabilities by a system programmer.  I am not interested so much in what the system can do.  I am much more concerned with what it already is doing, and what it will do when it reaches a certain threshold of use.  In other words, I am concerned with its boundaries.  A process is considered to be bound by the system resource that it will exhaust first.  Some processes are memory-intensive.  Therefore they are bound by how much memory is available to them.  Some processes are I/O intensive.  A process that writes millions of small files to the disk will run out of resources when it exceeds the capacity of the system’s input/output bus.  A process bound by processor resources is one that performs intense mathematical calculations.  Processes that render large pictures or perform other sustained mathematical equations are considered processor bound.

Applying this thinking to our own economy, I find the one constant that has stood out since the end of World War II is that our system currently appears to be energy-bound.  A shortage in system resources causes a slowdown.  In economic terms we would call it a recession.  Laws of supply and demand, which ordinarily balance out what we need from what we can afford, cease to function when a binding condition is encountered.  In pre-Depression economies it may have been more proper to speak of money supply or gold supply, or land supply as binding conditions.  Since money became virtual with the breaking of the gold standard, money supply has no longer been a binding factor, and the capabilities of our economy appear to have expanded until they reached the next natural binding condition, energy.

I tried doing some research on the post-WWII recessions.  There were just four recessions in the quarter-century following WWII.  I could only find data on one that was of any significance, and that was the recession of 1958.  This coincided with a global downturn in the economy but to the American worker was apparently barely a blip, as this quote seems to indicate:

In the United States, unemployment rose but there was little or no decline in personal income and no decline at all in consumption expenditures.

The only other recession I could find that seemed to me that it might have some meaning is the one of 1953 – which coincided with the Korean War.  None of the economic declines of the Post WWII period appear in popular literature of the time or as any significant feature of the cultural landscape until the early 1970’s.  A brief waffle around 1969 may have coincided with the phenomenon of oil production peaking in the United States – I submit that the changeover to gradually importing foreign oil had something to do with that one.  Of course, the next recession starts in 1973, exactly coinciding with the Oil Embargo.  After that, every successive economic cycle seems to be tied to energy prices.  Consider the following data:

1973, an Oil Embargo occurs.  The recession that follows lasts 16 months.

1979, a second Oil crisis occurs.  Another recession follows, lasting 6 months.  This recession is almost entirely based on the Iranian Revolution and at this time the Saudi oil regime, realizing their economic success is joined at the hip of ours, did their best to offset the impact, thus shortening the recession, but not enough to keep Jimmy Carter in office.  I daresay the recession of 1981-82, which followed barely a year later, is so close in time that it probably qualifies as an aftershock of that recession.  Remember, at that time Japanese cars were rapidly entering the American economy due to the chugging inefficiency of American models.

Oil prices spiked again in 1990 as Iraq prepared to invade Kuwait, and once again recession gripped the economy of the United States.  George H.W. Bush may have thought that reneging on his promise to not raise taxes ejected him from the Presidency, but as a victim of that recession I can tell you it was his utter cluelessness about the plight of the average American that brought it on.  I first became aware that elections had consequences in 1990, when I realized my President was a dipshit.

Similarly, though the economic policies of Bill Clinton provided a firm ground on which to grow the American economy by balancing our budget and encouraging worker-friendly policies, the boom of the late 1990’s was far more rooted in the sudden drop of oil prices in 1997.  I remember quite clearly reading about poor Texas oilfield lessors, choking to death on the lack of income because the economy was awash in cheap oil.

The recession of 2001 came after the price of oil once again peaked.  An economic bubble inflated by incredibly cheap oil was pricked by the sudden re-emergence of a price cycle that probably was cut off prematurely in 1997.  In other words, our economy roared along with 1960’s-level prices at 1990’s-level consumption rates.  When 1990’s level prices returned, reality set in.

So what’s our economy doing now, you ask?  Oil prices are at record highs.  Gas prices too, although even adjusted for inflation they could be higher.
Well, there are a lot of people, myself included, who think that unemployment is being vastly underreported, that economic suffering is being vastly understated, and that the average American is living through worse economic times than is generally acknowledged by the D.C. Cocktail Party Circuit.

But the point of the above exercise was to show that most of our economic hard times seem to coincide with the constriction of our energy supply.  Therefore, our economy is currently energy-bound.  This gets to the heart of why I’m such an adamant critic of the notion that controlling pollution (by way of introducing renewable energy) would cause economic misery.  This is the ass-hat theory of Bjorn Lomborg and other GW deniers, and it flies in the face of nearly all of the data we have available on how energy relates to the economy.

Introducing renewable energy to our economy as a staple would immediately reduce the cost of energy.  Since renewable resources are cheaper, and not constrainable by monopolist mining interests, renewable would remove the binding condition that has constrained our economy since the late 1960’s and permit a massive expansion to occur, on a level unseen since the Post WWII era.  My belief is that the Peak Oil catastrophists are overstating their case.  What’s happening with the U.S. economy right now is that we keep bumping up to the capacity of energy output, retracting slightly as we absorb that constricting force, and then expanding infinitesimally out to it again.  The only people making demonstrable gains in this situation are those sitting at the spigots of our energy sources.  We’ve reached a point where further gains are nearly politically impossible since our Washington elite have been bought completely out by the energy industry, and the only gains in efficiency are happening almost as a grassroots movement by people alarmed enough by global warming and oil price sticker shock to do something about it.

There are other binding conditions to our economy, and it’s no accident, in my opinion, that those conditions are all at the battleground of the great debates of Conservative vs. Liberal philosophy.


Healthcare is a binding factor for our economy because our modern, highly integrated society depends on the health of our workers.  Laborers in the information economy are specialized individuals and when one of those people goes missing in a tightly integrated organization, their knowledge of a system can have a dampening effect on productivity.  I know this for a fact because I manage an IT team.  We are no longer assembly-line workers and we are not plug-in units.  All the management theory in the world cannot make us so.  Healthcare security is important in the modern world because without it we cannot plan for health expenditures in the framework of a bi-weekly paycheck.  A single health disaster can cost a high multiple of a worker’s yearly salary.  The ordinary rules of supply and demand that govern other commerce are not present in healthcare.  You cannot bargain with multiple providers for insurance: you are either in the network, or you are out.  Movement between insurers is prevented first by the function of insurance tied to employment, and secondly for those who purchase insurance outside of employment, the pre-existing condition, or other barriers to qualification.  Without the ability of the purchaser to freely, rapidly choose competing providers of insurance, price is controlled entirely by the provider.  Since the insurance provider also controls the actions of the healthcare provider, all control now resides in the hands of an institution that has no economic accountability to the patient.  The patient is also not in possession of even a fraction of the information required to make a decision regarding his or her own health.  Patients do not choose illness and cannot choose to not treat illness – they can only postpone it and make it worse.  Fear and pain are the driving factors behind the "demand" for healthcare.  Raising prices does not reduce "demand" because people do not get sick on the whims of actuaries.


The information age demands educated individuals.  Without an education the modern economy has very little use for us as workers.  Jobs that pay well require the ability to synthesize information, read and write clear English, understand and manipulate computers, and interpret advanced business processes.  Studies prove that a well-educated worker returns to the economy many times the cost of their education.  Restricting education to those who can afford it only foments the creation of a permanent underclass who, in an information economy, literally have nowhere to go.  It is a prescription for the Morlocks and the Eloi.  I advise proponents of privatizing education to fortify their gated communities.

Finally, the bounding condition of housing has caught up to the Industrial Age.  Previous eras of American History were free of this one constraint due to a resource unavailable to any European economies: the frontier.  Although it is difficult to get too enthusiastic about the great openness of a frontier already occupied by technologically backward natives, it is true that for a time in the early era of American history, those made homeless by poor economic circumstance could simply wander a little further west.  The government would simply give them a home if they but made an effort to work the land.  This meant that the supply was essentially free.

Even in settled European economies prior to the Industrial era, human beings could always choose to live away from cities.  Squatters could find some common area to pick as their own.  In the age of Industrialization, however, this is virtually impossible.  Even in the remote areas of Wyoming, the most thinly-populated state in the lower 48, it would be difficult to park yourself in the mountains or the plains for long without being chased off by either governmental agents or private security teams.
These are therefore the four binding conditions of our industrial economy.  As binding conditions they are not subject to the rules of supply and demand, since the demand is involuntary (even for education), and the supply therefore does not need to follow any law of equilibrium.  A natural consequence of this thinking is that if we do not in some way regulate the supply of these needs, our economy will suffer needlessly.  The retraction of much of the utility of education has already shown itself to have disastrous consequences to our economy, as an uneducated, anti-intellectual populace is prone to believing the ludicrous and entirely untrue.  Further dumbing-down of America will result in a useless division of class, in a nation where highly-educated people are the only ones with a future.

And the constriction of energy and healthcare availability have choked our economy for years.  The ready availability of all of these is a requirement for our economy to function.  As I’ve noted before, using free-market rules to control a binding condition is like using painkillers to control hunger.  It may mask the problem for awhile, but the effects are in the end destructive.  Starving people, especially ones who aren’t finished growing yet, causes them to become stunted and withered.  Starving our economy will have a similar effect.  And the effects of this poor economic nutrition are literally showing up in the real world – United States citizens are falling behind the rest of the world in height.  We really are becoming a third-world banana republic.

There's a final binding condition which is extremely difficult to measure, but which I think is important to note.  That's credibility.  In particular, it's a measure of how much the participants in an economy trust the rules of that economy to be consistent.  An economy with little or no credibility undergoes a runaway condition such as inflation which destroys the significance of one or more of its key elements.  Measuring credibility with some key indicator is probably very difficult, but one thing is certain: when it's gone everyone knows it.

The economic uncertainty of the majority of Americans today is a direct result of shitty ideas propagated by an intellectual prostitute whose real goal was to please his wealthy friends with ideas that fit their rapacious schemes.  If we are to maintain a sustainable society we must immediately abandon the sloppy thinking that led us to this pass and start thinking in concrete, demonstrable terms.  I believe I have described the outlines of a framework for sound, repeatable analysis of what is really going on in our economy.  

The most important thing to realize is, we cannot afford to entertain ideological fantasies regarding the composition of our modern society anymore.  Reality is here.  It knocks most loudly and insistently, and it is not the world that Milton Friedman or any of his ilk have ever described.

Originally posted to slippytoad on Tue Oct 09, 2007 at 07:03 PM PDT.

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Comment Preferences

  •  Tips (16+ / 0-)

    I hope this wasn't too long.  I like my diaries short and sweet, but the topic was complex and I had a lot to say.

    I think that the task of discrediting Friedman and his stable of intellectual whores is going to be the major undertaking of this generation.  But we simply cannot go on with his fucked-up ideas running loose in our government.  They don't work.  They never have.

    Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

    by slippytoad on Tue Oct 09, 2007 at 07:04:34 PM PDT

    •  I'm off to bed (4+ / 0-)
      Recommended by:
      shpilk, ChapiNation386, lams712, Newzie

      Unfortunately economics prescribes a 5:30 a.m. wakeup call for me.  I realize I've put a ton of chaff up here to devour.  If I'm in the right mood after my morning run I'll try to respond to comments.

      Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

      by slippytoad on Tue Oct 09, 2007 at 07:14:12 PM PDT

      [ Parent ]

    •  Thanks to Naomi Klein Im losing some ignorance (2+ / 0-)
      Recommended by:
      ChapiNation386, lams712

      on these matters.

      I am horrified and sickened

      And to think this dispicable Friedman won a Nobel prize

      I straddle the thin line between Holistic and Assholistic

      by Goodbye Kitty on Tue Oct 09, 2007 at 07:15:59 PM PDT

      [ Parent ]

      •  I'm not going to respond to this diary (1+ / 0-)
        Recommended by:

        point by point, but there's at least one issue where I can offer the diarist some solace.  The theory absolutely does not state

        that, left to itself, any market would provide us more efficient healthcare than any government

        there is an extensive literature, both theoretical and empirical, documenting exactly what conditions have to hold for the market to achieve an efficient outcome.  The reason you don't hear about it more often is because the literature is so extensive it gets very technical very quickly.  

        Since Friedman's passing, George Akerlof is considered (at least among the Berkeley Econ Department) the greatest living economist.  I never met Friedman, but I've spend hours sitting in Akerlof's office, and I can tell you 1) he fits in in Berkeley, and 2) he treats Friedman as an authority.

        This is all my way of saying: we disagreed with the guy on a lot of issues, but Friedman was intellectually honest, he was brilliant, and he deserves our respect.

        •  Im sure that the families of the million or so (3+ / 0-)
          Recommended by:
          slippytoad, lams712, willb48

          People who disappeared in Chile, Argentina and Brazil, countries being directly guided by Friedman and his economic 'liberation',would have LOVED to have had the opportunity to show Friedman the respect he deserves.

          With a rope

          I straddle the thin line between Holistic and Assholistic

          by Goodbye Kitty on Tue Oct 09, 2007 at 08:03:36 PM PDT

          [ Parent ]

        •  What about Shock Doctrine? (1+ / 0-)
          Recommended by:

          I know two things about M Friedman:
          that my son thinks he's a genius (said son has been steadily employed & NEVER lived at home since finishing college; Friedman's influence can't be all bad)

          and that Naomi Klein wrote a book about Friedmanite policies applied by Bremer in Iraq and planned by HR1400 etc for Iran.  

          My son amazes me.
          What I understand from Klein terrifies me.  Ed Royce, R-CA, explained why the House passed HR1400 in terms that seemed to have been pulled right out of "Shock Doctrine."  In an Aug. 2003 appearance on Lehrer's News Hour, John Mearsheimer, himself a U of Chicago prof, predicted that Iraqis would seethe with resentment at US taking over the reconstruction of their country. Facts on the ground validate Mearsheimer's prediction and the  fundamental betrayal that Klein points out but Friedman ignores: that when the power of self-determination is stripped from people, they become enraged and they don't get over it, they get even.  

          Friedman is said to have been "in love" with mathematics.  He may not have been so good in the human nature department.

          When a coward sees a man he thinks he can beat he becomes hungry for a fight. -Chinhua Achebe, Things Fall Apart.

          by BughouseWW on Tue Oct 09, 2007 at 08:15:23 PM PDT

          [ Parent ]

        •  You're free to defend his ideas (0+ / 0-)

          But do not think that simply telling me you know a guy who knew him and he's one hell of a great guy constitutes a defense.  I could give a shit about that.

          Defend the ideas.  And "greatest living economist" doesn't carry a lot of weight with me, as you must realize.  I don't think economists know what they're talking about anymore.

          Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

          by slippytoad on Wed Oct 10, 2007 at 05:00:04 AM PDT

          [ Parent ]

    •  Just a philosophical thought about science, (1+ / 0-)
      Recommended by:

      and that it is the nearest thing that we have to fortune-telling.  Now, please no torches and pitchforks, I am a professional scientist.  I find it the highest return on intellectual investment when I can look at a new set of facts and, by using sound theory, predict how that system will behave under carefully-defined conditions.  That is what science DOES.  One quick example:

      When Fermi in Chicago assembled the first (actually, Oklo was first, but it was natural, I would love to hear from anyone familiar with the Oklo event) "atomic pile", his team had no way to be certain that it would operate as thought.

      They had observations, lots of them, and a pretty darned good grasp of basic theory.  And it worked.  It did not blow up, and it did not no nothing.  That team predicted the future, and got it pretty much correct.

      That is what science if for, not to defend pet ideas, not to prove others wrong for the sake of it, but to foster an understanding of basic, or advanced, principles that in fact come to pass.  If the predictions do not pan out, either the data, the theoretical framework, or both are faulty.  Then it time to give a second or third look.  Regards, Doc.

  •  Linky? (1+ / 0-)
    Recommended by:

    I can't seem to locate the offending diary.

  •  MF is the spokesperson for pirate capitalism (4+ / 0-)
    Recommended by:
    PBnJ, slippytoad, ChapiNation386, lams712

    "Free Market" is just the cover for piracy and profiteering. Anyone who supports Milton Freidman is by definition either a member of the plutocracy or a wanna-be.

  •  I think that essential utilities, those upon (4+ / 0-)

    which life depends, should not be subject to free markets.  I mean power, water, healthcare, essential transportation (for example making affordable air travel available throughout the nation), education, roadways, railroads, mortgages, I'm probably overlooking some. I like regulation.  I think there must be a reason not to regulate rather than find a reason to regulate.

    If you don't have an earth-shaking idea, get one, you'll love building a better world.

    by hestal on Tue Oct 09, 2007 at 07:16:36 PM PDT

    •  Exactly (1+ / 0-)
      Recommended by:

      Our modern lifestyle is built on those things.  People who fall out of that lifestyle simply get crushed in the cogs of the machine.  That has to change.

      Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

      by slippytoad on Wed Oct 10, 2007 at 04:36:01 AM PDT

      [ Parent ]

  •  Friedman's ticket to hell. (6+ / 0-)

    The article entitled "The Social Responsibility of Business Is to Increase Its Profits."
    The money quote.
    "there is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

    And I don't even really believe in Hell, but this quote is used every god damn time a greedy ass conservative justifies starving kids or withholding medical treatment.

    Cy Rules, Herky Drools, this Hawkeye alumnus bows to the Victors from Iowa State..regards to clonecone

    by UndercoverRxer on Tue Oct 09, 2007 at 07:19:02 PM PDT

    •  And your reply? (3+ / 0-)

      I know what mine would be if I encountered a fk so arrogant:

      "What does that mean? No, seriously, what does that mean? Because I don't understand how the unbridled increase of profits -- an inherently self-centered activity -- can be described as something that contributes to the common good, which is what social responsibility is."

      And then I'd call them a stupid fk, because you know metaphors just don't work with idiots like that.

      Chaos. It's not just a theory.

      by PBnJ on Tue Oct 09, 2007 at 07:28:45 PM PDT

      [ Parent ]

      •  Oh this happens often in my program. (3+ / 0-)
        Recommended by:
        PBnJ, lams712, ilex

        It's amazing how even Health Care Economists barf that crap out. I asked our local Friedmanista if he'd let his kids go without medical treatment if it wasn't deemed economically efficient...he blanched he was so mad. I'm glad he's not on my committee.

        Cy Rules, Herky Drools, this Hawkeye alumnus bows to the Victors from Iowa State..regards to clonecone

        by UndercoverRxer on Tue Oct 09, 2007 at 07:47:44 PM PDT

        [ Parent ]

    •  And whenever some... (3+ / 0-)

      ....conservative or libertarian jackass starts braying about that, I just say, "well, of course that's why we need to have a social safety net and business regulations."

  •  Check out the Galbraithiano. (3+ / 0-)
    Recommended by:
    ChapiNation386, lams712, willb48

    You will probably like the Galbraithiano article in the Nation discussing Hugo Chavez' appreciation of John Kenneth Galbraith.

    Chávez: 'Galbraithiano'  
    Greg Grandin
    Last year, the New York Times reported that Hugo Chávez, in his speech before the United Nations--the one in which he called George W. Bush the Devil and urged Americans to read Noam Chomsky--expressed regret that he hadn't had a chance to meet the linguist before he died. A call to Mr. Chomsky's house, the Times writer quipped, found him very much alive. The Times, though, had to issue a quick correction when, upon review of the original Spanish, it became clear that Chávez was referring not to Chomsky but rather to John Kenneth Galbraith, who had indeed passed away a few months before.

    There is something more than a little ironic about this incident, where the press, in a rush to ridicule the controversial Hugo Chávez, lost John Kenneth Galbraith in translation, for it is exactly the Harvard economist's brand of New Deal social democracy, itself long expunged from public discussion, that would allow for a more honest consideration not just of Chavismo but the broader Latin American left of which it is a vital part.

    Here it is at Portside

  •  Milton Friedman was/is a massive... (5+ / 0-)

    ...intellectual fraud who has done more to destroy the field of economics than nearly any other person. Over the course of 30 years economics has become an Ayn Rand-esque, "free-market" loving, plutocracy-justifying, right-wing promoting course of study. It has become overly mathematical and statisical and their models really don't reflect real world situations. And if there is something that is troubling to the model they just "assume" it out of the model (I was a graduate student in economics ten years ago I learned some of the "tricks of the trade"). Friedman was at the forefront of this movement (and his Chicago School) that has turned nearly all economics departments across the US in conservative propaganda machines. I'm glad I'm no longer involved with that field.

    "...if my thought-dreams could be seen, they'd probably put my head in a guillotine...." {-8.13;-5.59}

    by lams712 on Tue Oct 09, 2007 at 07:31:19 PM PDT

  •  the Chile "test" (7+ / 0-)

    The Chicago School of Economics got that chance for 16 years in Chile, under near-laboratory conditions. Between 1973 and 1989, a government team of economists trained at the University of Chicago dismantled or decentralized the Chilean state as far as was humanly possible. Their program included privatizing welfare and social programs, deregulating the market, liberalizing trade, rolling back trade unions, and rewriting its constitution and laws. And they did all this in the absence of the far-right's most hated institution: democracy.

    The results were exactly what liberals predicted. Chile's economy became more unstable than any other in Latin America, alternately experiencing deep plunges and soaring growth. Once all this erratic behavior was averaged out, however, Chile's growth during this 16-year period was one of the slowest of any Latin American country. Worse, income inequality grew severe. The majority of workers actually earned less in 1989 than in 1973 (after adjusting for inflation), while the incomes of the rich skyrocketed. In the absence of market regulations, Chile also became one of the most polluted countries in Latin America. And Chile's lack of democracy was only possible by suppressing political opposition and labor unions under a reign of terror and widespread human rights abuses.

    Conservatives have developed an apologist literature defending Chile as a huge success story. In 1982, Milton Friedman enthusiastically praised General Pinochet (the Chilean dictator) because he "has supported a fully free-market economy as a matter of principle. Chile is an economic miracle." (1) However, the statistics below show this to be untrue. Chile is a tragic failure of right-wing economics, and its people are still paying the price for it today.

    fact does not require fiction for balance

    by mollyd on Tue Oct 09, 2007 at 07:47:48 PM PDT

  •  a book to read (4+ / 0-)
    Recommended by:
    alizard, lams712, Goodbye Kitty, palantir

    Speaking Volumes: The neocons' 'planned misery'

    Sunday, September 30, 2007

    In her new book, "The Shock Doctrine: The Rise of Disaster Capitalism" (Metropolitan, $28), the Canadian social critic Naomi Klein has taken a sledgehammer to the legend of neocon servative economist Milton Fried man and the Chicago School of economic theory.

    fact does not require fiction for balance

    by mollyd on Tue Oct 09, 2007 at 07:50:33 PM PDT

    •  I tried to pick that up (0+ / 0-)

      At the library when I was doing a little reading prepatory to this diary.  Wasn't available yet.  But it's coming so highly recommended I may have to just break down and get it off Amazon.  The other two books I got were Friedman's "Free to Choose," and a book called "Adam's Fallacy" which I found to be immensely more interesting.  I intend on doing a review of "Adam's Fallacy" here shortly, as it rips the entrails out of much of the supply-side dogma we're fighting these days.

      Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

      by slippytoad on Wed Oct 10, 2007 at 04:39:35 AM PDT

      [ Parent ]

  •  Shorter Friedman (1+ / 0-)
    Recommended by:

    [think Norquist]

    Laissez-unfaire healthcare.
    Let the poor die in the streets.

    socialist democratic progressive pragmatic idealist with a small d.

    by shpilk on Tue Oct 09, 2007 at 09:28:16 PM PDT

  •  I'm no defender of MF, nor do I think that lots (0+ / 0-)

    of what economists actually claim is well confirmed. But I'm not all that comfortable with the wholesale dismissal of the field either.  There are things you can learn from certain models of human behavior and some of them make more or less coarse-grained predictions about the effects of this or that in these or those conditions given certain further background assumptions.  Most disciplines start out pretty shakey and get more sophisticated and often also better at explaining the domain they define for themselves over time.  So I'm not sure we can demarcate a clear line between science and non-science, nor am I sure that that line if drawable would be the line between investigations worth pursuing and those not worth pursuing.

    So I think a better line of criticism would be to take some claim that the man made and show it false or unwarranted or otherwise flawed.  It isn't that hard to do.  After all, most of it isn't rocket science.  (For example, his arguments that markets will take care of discrimination because it will raise the cost of doing business for those who discriminate ignore the fact that there can be a demand for discrimination by customers who will favor those who do over those who don't.)

    •  As economics is practiced today (1+ / 0-)
      Recommended by:

      It's nothing more than intellectual masturbation.  Ridiculous things are claimed, fact is flat-out ignored, and the real purpose of our society -- which is to preserve human dignity -- is utterly lost.  If you go back and read our Constitution, the fundamental protections all revolve around human dignity.  If you can look back at the last 30 years of Friedman's influence on economics and tell me his policies were geared around the needs of human beings and the dignity of the American citizen, I have a bridge for you.

      Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

      by slippytoad on Wed Oct 10, 2007 at 04:42:20 AM PDT

      [ Parent ]

      •  Again, I'm not defending MF. I think that most of (0+ / 0-)

        his views about what should be done were wrong and refuted by reality in combination with any reasonable and decent set of moral principles you like. (I can't say whether his monetary theories had anything going for them, but even if they did that does not by itself show anything much about the rest of his views.)

        It's the rather broad brush of the original posting that I was taking exception to. I'm saying that Friedman is not (so far as I know) the only thing economics has to offer. Robert Reich and Paul Krugman, for example, are also economists with a popular following and they have views opposed to Friedman's on many issues.  Then there's Amartya Sen, who also won the same Nobel prize (the economics one)as Friedman, and who works on all sorts projects of a much more egalitarian cast.

        I very much doubt that most economists are slavish followers of Friedman, though from what I have read much of the field is dominated by certain approaches and views and it would benefit from an opening up of the profession. That's a serious complaint, but it doesn't mean that there's nothing of any value there.

        •  Unfortunately (0+ / 0-)

          When people keep pointing at the "Nobel" prize that stupid shit achieved, intellectuals with actual ideas have to fight like hell to overcome that, and it becomes the case that "Economics" equals that guy.  What I'm attacking his the phony gravitas he achieved.  He was in no way entitled to it.

          I have mentioned "Adam's Fallacy" in other comments here.  It's a brilliant book and I intend to review it here shortly.  One of the key points it makes is that much of the theory of economics that Adam Smith supposedly laid down in stone are intellectually flawed.

          But regardless, I don't think economics has proven itself as a science and it won't until people like Friedman are soundly repudiated.

          Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

          by slippytoad on Wed Oct 10, 2007 at 03:51:27 PM PDT

          [ Parent ]

          •  Ayyn Rand has the same phony gravitas without the (0+ / 0-)

            Nobel.  Which leads me to think the Nobel has nothing to do with it.  The guy was a punchy writer who was able to make sometimes confused ideas seem like commonsense.  That is he was a very good propagandist.  And decent readers of Adam Smith will find much to like and much to disagree with in his theories, much of which will not fit all that well with the popularized (by propagandists) view of Smith. (Marx didn't much like him and could be quite funny in his dismissals, but Marx himself was also an economist, among other things. And he was not always the most charitable reader either.)

            I don't much care whether we call economics a science.  Some of what people who get called economists do is interesting.  Some of its crap. Take any social science field and you'll find the same thing, though I'll give you that there might be an ideological slant in most economics departments.  But the interesting stuff is interesting and I don't think that the popularity of MF says much about that one way or the other.

            In other words, criticism is fine, but more fine-grained criticism is better.

  •  This is quite brilliant, slippy. (0+ / 0-)

    A very huge task - putting out your detailed thoughts in so linear and comprehensible a fashion.

    And the occasional dark humor is quite rewarding too.

    All in all, a great read.

    "You can't be neutral on a moving train." - Howard Zinn

    by bigchin on Tue Oct 09, 2007 at 09:50:11 PM PDT

  •  Conflating economics and politics a big mistake!! (0+ / 0-)

    When the most important thing to a people becomes wealth, then politics gets equated with economics. Economics then gets elevated to the status of physics in its predictive ability, even though this is far from the truth in complex situations like national economies. Soon after it is further elevated  to quasi-religious dogma, whose truth is presumed unquestionable. Voodoo economics, a perversion of market theories stemming from Hayek, Friedman and others, is now a religious dogma, even though it is not a science and not even good economics.

    Milton Friedman was a brilliant economic thinker according to his peers. His major mistake lay in his assuming that that automatically made him a great political thinker as well. This was a huge mistake as the Chilean experience showed, and the similar experience of many of his less brilliant followers, as Naomi Klein observes in The Shock Doctrine, which should be required reading. Like Alan Greenspan now, he could not admit that he was wrong in his practical judgments, and he tried to put lipstick on the pig to which his erroneous application of theory gave birth.

    Economics by the book is far different from governing, because markets are value-free, other than with respect to economic value. But there are many other human values which enter the political equation, and economic value is only one of them, and not the most important one either. Equating conflating economics with politics overlooks this crucial truth of the human condition and reduces human worth to quantity instead of quality.  

    Live unity, celebrate diversity.

    by tjfxh on Tue Oct 09, 2007 at 10:11:27 PM PDT

  •  Ideology (0+ / 0-)

    At some point I heard a program about "Fair Trade coffee". They interviewed some Cato Institute type who kept trying to explain how it's bad, because it's not free-market-something-or-other. The underlying point, I suppose, is that "how dare people behave like anything but hyperrational agents out to maximize their material wealth". In other words, the only thing wrong with this case is that it doesn't fit into existing model. A true scientist, of course, re-evaluates the model at this point. An ideologue doesn't.

    And then, of course, there's this matter of two arguments in favor of free market. One is that it is a moral imperative (per Rand, etc.) The other is that it is the most efficient system (Adam Smith is invoked here, see El Cabrero's recent diary however) of allocating resources, and, ergo, things are better left to the market because we all will benefit.

    The problem, of course, is that both of these are judgments in terms of what is the ultimate good, and thus, they are in conflict. If the ultimate good is to pursue your own self-interest, then whether it benefits anyone else is not a consideration at all. (Case in point: a monopoly).

    Basically what follows is that there seems to be too little 'science', too much rationalization.

    •  Our society is not built on maximizing wealth (0+ / 0-)

      At least, not the Constitution that I read.  It was built around preserving human dignity (in the form of Liberty) and enabling useful endeavour.

      And I have a fantastic book that I'm going to be reviewing here, called Adam's Fallacy by Duncan Foley, which absolutely devastates Smith's ideas.  His point as I've gotten it so far is that Smith built his theories around the premise that selfish, often immoral behavior in the pursuit of wealth would tend toward the common good in economic efficiency.  He has so far shown to astonishing effect how Smith often abandoned a line of argument on one topic and switched rationales in the middle.  The overall idea I'm getting is that Smith's ideas were intellectually very sloppy.

      Olaf(upon what were once knees) does almost ceaselessly repeat "there is some shit I will not eat"

      by slippytoad on Wed Oct 10, 2007 at 04:48:13 AM PDT

      [ Parent ]

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