Saturday, November 18, 2006

Milton Friedman an Encominium

I never understood why Friedman considered the quantity theory of money to be the belly button of the universe. I agree with Paul Krugman and Brad DeLong (who tend to know what they are talking about) that monetarism was actually a very minor aspect of Friedman's contribution to economics.

He was brilliant (it is strange and painful to use the past tense). His contributions include the accelerationist critque of the Phillips curve (independently made by Phelps who just won a nobel prize for that), the permanent income hypothesis, the description of what a "peso problem" is, the serious observation of the need to look at prices which are actually paid not list prices etc etc etc.

He was often brilliant. He obtained his god-like status for some economist (and demonic mystique to the others) because he bet his reputation on a hotly contested prediction again and again and again and won each time. Might have been a long long string of luck, but, personally I doubt it.

Friedman was three things, an economist who was strangely brilliant (or maybe he sold his soul to the devil), a monetarist fanatic with a fetish for MV=pY, and a libertarian pro-market extremist out there with Hayek and Rand. I see these three Friedman's as separate (I want to admire the first and ignore the other two).

Friedman saw a connection. The only one I see is that he reliably opposed a Keynsian consensus which I don't even remember. He is so influential that, in the UK, "monetarist" is used to mean "pro-market" or maybe "indifferent to the needs of the poor."

In many fields, it is difficult (to put it mildly) to find intelligent thoughtful intellectually serious conservatives. Economics is not one of those fields. Many brilliant thoughtful economists are free market fanatics. However, even with such competitors for the crown of the profession's leading opponent of state intervention in the market, Friedman clearly stood head and shoulders above the others.
He was a genius and (perhaps because) he could explain all of his thoughts to ordinary people.

update: I get a link from a libertarian site (didn't you guys notice that I wanted to ignore Friedman's free market fanatacism).

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