Below the orange squiggly is an article analysis that I had written for a Macro Economics class. I decided to post it here because the topic is something that many Kossacks seem to be interested in. Enjoy!
What happened to Milton Friedman? The former guiding light of conservative economic policies appears to have gone missing. Considering the fact that Dr. Friedman was a leader of the Chicago school of economic thought, an economic adviser to President Reagan, and a Nobel Prize recipient who died only seven years ago, he should still be fairly popular in American culture. Yet even when he is name-checked in policy debates today, it is done in a most unsubstantial way. A recent column by Dr. Paul Krugman attempts to explain Friedman’s vanishing act from conservative economic belief.
In “Milton Friedman, Unperson”, Krugman discusses how one of the three major economists from the differing schools of thought (John Maynard Keynes, Friedrich August Hayek, and Milton Friedman) has essentially disappeared from policy debates while the other two live on in the debates. According to Krugman, part of Friedman’s disappearance can be accounted for by his mistakes on monetary policy, unemployment, and inflation. But this alone would not account for why Friedman is not associated with conservative policy much these days because there are many economists who are continually wrong and continue to be famous.
Krugman then goes on to cite the main reason for Friedman’s disappearance from conservative policy as being that, due to our country’s lunge to the right on economic issues, Friedman has been turned into a centrist by today’s standards. To Friedman’s left is Keynes (of whom most liberals support), and to Friedman’s right is Hayek on the Rand Paul wing of conservatism. On the Paul Ryan wing of conservatism, Friedman’s right is Francisco d’Anconia.
As mentioned earlier, Friedman is still name-checked as being a conservative leader even while his economic theories are not well liked by the same conservatives who name-check him. Take for example the recent case of Senator Rand Paul, who is very against the Federal Reserve and very much for Austrian economics. When asked who his favorite choice for Federal Reserve chairman would be, Paul answered with Milton Friedman, despite the fact that Friedman is in favor of an active Federal Reserve System and had this to say about Austrian economics:
I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.
I do not believe that Friedman was right about everything, in fact I am much more of a believer in Keynesian economics. However, I do believe that Friedman’s record should be treated with the respect it deserves. After reading quite a few articles about Friedman, I have found that many policy debaters (such as Paul in the example above) use Friedman’s economic beliefs as though it were a Rorschach test that can be viewed to accommodate almost any economic view.
I agree with Krugman on this explanation of how Friedman lost his influence on conservative policy and I also agree with him that it is bad for public discourse and policy that it has happened. The center is a lonely place in politics these days. With Friedman being attacked from the left for his fiscal policies while simultaneously being attacked from the right on monetary policy, there is no side left to defend Friedman’s economic theories. So while America’s right moves further to the right, the former intellectual leader of conservative economics is left in the dust.
8:33 AM PT: Wow, my first Recommended diary! Thank you all for you support, I had no idea this would be as popular here as I thought. Since this was so well-received by the Daily Kos community, I plan on uploading some more of my politically-relevant papers that I wrote for college.
