Ludwig von Mises on Milton Friedman

Friedman is not an economist.  He’s a statistician.

~ Ludwig von Mises

Milton Friedman on the drug war

See, if you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel.  That's literally true.

~ Milton Friedman

Milton Friedman on government programs

Nothing is so permanent as a temporary government program.

~ Milton Friedman

Time Magazine on Milton Friedman's inflationary advice in the late 1960s

Milton Friedman's opinions have particular weight now because the Nixon Administration has placed great reliance on the policies that he prescribes to deal with the current inflation...  Ironically, Friedman's principal complaint is that the Federal Reserve is overdoing the restraints in its effort to cure inflation.  "If the board continues to keep the growth of money at zero for another two months, I find it hard to see how we can avoid a severe recession," he says.  "The board has made the same mistake that it has made all along. It is going too far in the right direction."

~ Time, December 19, 1969

Milton Friedman on economic fallacies

Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.

~ Milton Friedman

Kevin Duffy clears up confusion about capitalism

capitalism: achieve ends (making money) without using violence 

politics: achieve ends through violence (obfuscate by calling it "democracy") 

political capitalism: mix the two 

Left: blame capitalism for all ills 

political establishment: mislabel Milton Friedman a capitalist

~ Kevin Duffy, tweet, October 6, 2020

Kevin Duffy on government "experts"

Imagine an expert who advocates a laissez faire approach to any problem.  He or she wouldn’t advance very far in “the expert model.”  For example, Alan Greenspan, a social climber above all, realized this at an early age and changed his worldview (which originally favored a gold standard).  Others, like Henry Kissinger, are plucked out of obscurity and promoted because their views are in perfect alignment with those of the political establishment.  Milton Friedman was a clever, but unusual choice for respectability.  Known for his free market views, Friedman was a monetarist who argued for greater intervention by the Federal Reserve in the 1930s to prevent the Great Depression.  He would later influence a man named Ben Bernanke, champion of “helicopter money.”

In order to rise through the ranks, economists, geopolitical consultants, regulators, and health experts must conform to the interventionist script.

~ Kevin Duffy, "The Expert Model," LewRockwell.com, May 27, 2020

Kevin Duffy on how Milton Friedman was guilty of data mining when studying the Great Depression

Milton Friedman studied the Great Depression and noticed that money supply dropped by one-third from 1929-1933.  He came to the conclusion that this was the cause of the depression and that the Fed hadn't acted strongly enough.  He also influenced a guy by the name of Ben Bernanke who, at Friedman’s 90^th birthday party, vowed not to make the same “mistake.” 

Did the Fed really sit by idly as Friedman claimed?  Actually, no.  The Fed acted aggressively, buying government securities and expanding its balance sheet from 1929-1933.  It also lowered the discount rate from 5% to 1 ½%.  Friedman appears to be guilty of data mining.  Correlation doesn’t prove causation.  In fact, gold flows and loss of confidence in banks were contributing factors to the contraction in money supply.  If anything, the monetary inflation of the Fed probably made matters worse.

~ Kevin Duffy, "Mr. Market Flunks the Marshmallow Test," Grant's Spring Conference, March 15, 2017

Walter Block on how the truth about Friedman, Reagan, and the Great Depression is distorted by language

Walter: Well, we spoke of being free to choose earlier; that’s of course the title of a famous book by Milton Friedman, an economist highly regarded by most free-market type people. I must say a word or two about Milton Friedman.

Q: Okay, shoot. Metaphorically; no sectarian violence allowed.

Walter: Murray Rothbard used to say that mainstream economists specialize in what they are bad in. If you look at Milton Friedman’s work, you can see that he’s very good on free trade, minimum wage, rent control, occupational licensure, and other topics…

Q: But he was a monetary interventionist.

Walter: Yes, he was a monetary interventionist – and that was his main thing, apart from educational vouchers, which are also a horrible idea. If someone says “monetarist,” who will most people come up with by association? Milton Friedman. He was just horrible on this; he favored fractional reserve banking, he favored the Fed, all sorts of government monetary and tax intervention, and he had the audacity to name his book Free to Choose. But when people were free to choose, what did they choose? Gold. He’s a disgrace!

Q: Don’t hold back, Walter – tell us what you really think.

Walter: [Chuckles] Well, I don’t mind disagreement. We have to have Krugmans and Keyneses – but the problem is that everyone thinks Friedman was a champion of free enterprise, and people will come to you, and me, and Doug, and tell us were wrong because “even Milton Friedman concedes…”

Q: It’s like the problem arising from Ronald Reagan using libertarian rhetoric to get elected, and then overseeing the biggest acceleration of growth in government ever seen until that time. That had typical results of too much regulation and government spending, and people think that the Reagan years showed that free enterprise doesn’t work. Just as people are taught that the Great Depression proves that “unbridled laissez-faire capitalism” doesn’t work – when, in fact, the Depression was the result of government intervention into the economy.

Walter: Precisely.

~ Walter Block, "Walter Block: Doug Casey is an Optimist," LewRockwell.com, April 13, 2013

Time magazine on the Fed doing "practically nothing" to stop the contraction of the money supply in the early 1930s

[Milton] Friedman blames unknowing monetary policy in large measure for the magnitude of the Depression of the 1930s. Partly because so many banks failed between 1929 and 1933, the U.S. supply of money shrank by 33%—and that compounded a worldwide economic collapse. The Federal Reserve, which took a narrow view of its responsibilities, felt itself almost powerless to reverse the tide of events. Not really understanding what should be done, it did practically nothing to offset the contraction of the money supply.

~  Time, December 19, 1969

Paul Krugman on Milton Friedman's inflationary advice

Mr. Bernanke and his colleagues seem stunned to find themselves in the cross hairs. They thought they were acting in the spirit of none other than Milton Friedman, who blamed the Fed for not acting more forcefully during the Great Depression — and who, in 1998, called on the Bank of Japan to “buy government bonds on the open market,” exactly what the Fed is now doing.

~ Paul Krugman, "Axis of Depression," The Opinion Pages, The New York Times, November 18, 2010

Milton Friedman on Austrian business cycle theory

The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false.

~ Milton Friedman, "The Monetary Studies of the National Bureau, 44th Annual Report," The Optimal Quantity of Money and Other Essays, Chicago: Aldine, pp. 261–284

Murray Rothbard on Milton Friedman's brand of "free market economics"

Mention "free-market economics" to a member of the lay public and chances are that if he has heard the term at all, he identifies it completely with the name Milton Friedman. For several years, Professor Friedman has won continuing honors from the press and the profession alike, and a school of Friedmanites and "monetarists" has arisen in seeming challenge to the Keynesian orthodoxy.

However, instead of the common response of reverence and awe for "one of our own who has made it," libertarians should greet the whole affair with deep suspicion: "If he’s so devoted a libertarian, how come he’s a favorite of the Establishment?" An advisor of Richard Nixon and a friend and associate of most Administration economists, Friedman has, in fact, made his mark in current policy, and indeed reciprocates as a sort of leading unofficial apologist for Nixonite policy.

In fact, in this as in other such cases, suspicion is precisely the right response for the libertarian, for Professor Friedman’s particular brand of "free-market economics" is hardly calculated to ruffle the feathers of the powers-that-be. Milton Friedman is the Establishment’s Court Libertarian, and it is high time that libertarians awaken to this fact of life.

~ Murray Rothbard, "Milton Friedman Unraveled," article originally appeared in The Individualist in 1971, and was reprinted in the Journal of Libertarian Studies in the Fall 2002 issue

Bruce Bartlett on the root cause of the Great Depression: sharp contraction of the money supply

As economists Milton Friedman and Anna Schwartz proved to the satisfaction of most economists, the core economic problem in the early 1930s was a contraction of the money supply by a third. This caused the general price level to fall by about 25%.

Deflation caused real wages to rise, forcing employers to lay off workers to reduce labor costs; it forced businesses to go bankrupt because they had to sell goods for less than they cost to produce; it magnified the burden of debts as borrowers had to repay loans in dollars worth more than those they were lent; and it increased real interest rates and the real burden of taxation.

~ Bruce Bartlett, "The Real Lesson of the New Deal," Forbes.com, February 13, 2009

Milton Friedman on visible and hidden effects of government programs

People hired by government know who is their benefactor. People who lose their jobs or fail to get them because of the government program do not know that that is the source of their problem. The good effects are visible. The bad effects are invisible. The good effects generate votes. The bad effects generate discontent, which is as likely to be directed at private business as at the government.

~ Milton Friedman

Ben Bernanke on the Fed's role in causing the Great Depression

I would like to say to Milton [Friedman] and Anna [J. Schwartz]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

~ Ben Bernanke, "On Milton Friedman's Ninetieth Birthday," At the Conference to Honor Milton Friedman, University of Chicago, Chicago, Illinois, November 8, 2002

Milton Friedman on the libertarian movement

I think the libertarian movement is doing fine. I think that REASON magazine has been remarkably good; it has been very effective. It takes many kinds of people to make a movement. And one of the most important things are publications. In any activity you have manufacturers, wholesalers, and retailers; and all three are essential and necessary. There are only a relatively small number of manufacturers of ideas. But there can be a very large number of wholesalers and retailers.

As I look around me I'm impressed by the fact that there's increasing attention paid to libertarian ideas. If you look at the picture now, compared with 30 years ago, there's no comparison. Now you've got much more. As far as journals are concerned, then we had the Foundation for Economic Education's Freeman; for a while we had the New Individualist Review in Chicago, but that was about it. Bill Buckley established National Review, which is in a different corner.

But look at the situation today. You have REASON magazine, you have Liberty magazine. You've got all of this stuff that spouts out from the Cato Institute and the Competitive Enterprise Institute and a half dozen other think tanks. In fact, I think there are too damn many think tanks now.

~ Milton Friedman, "Best of Both Worlds," Reason, June 1995

Milton Friedman on foreign policy

I don't believe that the libertarian philosophy dictates a foreign policy. In particular I don't think you can derive isolationism from libertarianism. I'm anti-interventionist, but I'm not an isolationist. I don't believe we ought to go without armaments. I'm sure we spend more money on armaments than we need to; that's a different question.

I don't believe that you can derive from libertarian views the notion that a nation has to bare itself to the outside without defense, or that a strong volunteer force would arise and defend the nation.

~ Milton Friedman, "Best of Both Worlds," Reason, June 1995

Milton Friedman on Murray Rothbard

Rothbard was a very different character. I had some contact with Murray early on, but very little contact with him overall. That's primarily because I deliberately kept from getting involved in the Libertarian Party affairs; partly because I always thought Murray, like Rand, was a cult builder, and a dogmatist. Partly because whenever he's had the chance he's been nasty to me and my work. I don't mind that but I didn't have to mix with him. And so there is no ideological reason why I kept separate from him, really a personal reason.

The difference between me and people like Murray Rothbard is that, though I want to know what my ideal is, I think I also have to be willing to discuss changes that are less than ideal so long as they point me in that direction. So while I'd like to abolish the Fed, I've written many pages on how the Fed, if it does exist, should be run.

Murray used to berate me for my stand on education vouchers. I would like to see the government out of the education business entirely. In that area, I have become more extreme, not because of any change of philosophy, but because of a change in my knowledge of the factual situation and history.

~ Milton Friedman, "Best of Both Worlds," Reason, June 1995

Milton Friedman on public policy

Throughout my career, I spent most of my time on technical economics. This policy stuff has been a strict avocation. If you really want to engage in policy activity, don't make that your vocation. Make it your avocation. Get a job. Get a secure base of income. Otherwise, you're going to get corrupted and destroyed. How are you going to get support? You're only going to get support from people who are ideologically motivated. And you're not going to be as free as you think you're going to be.

One of the most important things in my career is that I always had a major vocation which was not policy. I don't regard what I've done in the field of monetary policy as on the same level as what I've done about trying to get rid of the draft or legalizing drugs. One is a technical byproduct of scientific work, and so that's the only sense in which my vocation has affected my policy. But by having a good firm position in the academic world, I was perfectly free to be my own person in the world of policy. I didn't have to worry about losing my job. I didn't have to worry about being persecuted.

I think you'll make a mistake if you're going to spend your life as a policy wonk. I've seen some of my students who have done this. And some of them are fine, and some of them, especially those who have gone to Washington and stayed, are not.

~ Milton Friedman, "Best of Both Worlds," Reason, June 1995