Goodbye, Milton Friedman

I am back. I was not going to post today but something sad came up. It is sad on a larger level as I did not know the man personally. I have admired him and read his books. He spoke to me, or should I say his personal philosophy and work as an economist did. He was Milton Friedman, the scholar/scientist/economist most closely associated with the University of Chicago and the Chicago School of Economics. They did philosophical battle with the Keynesian economists of the day. Their basic, boiled down to something overly simplistic, notion was that people should be free to choose ("Free to Choose" is a great book written by Milton and Rose Friedman from the late 70s and widely influenced the philosophies of Ronald Reagan and Margaret Thatcher) and allow the markets to work. Government should be small, with little economic influence. It is a philosophy that values FREEDOM and individual choice and opposes the tyranny of government.

Now, I realize how boring a subject this can seem to be and to me, it is very fascinating. It is economics espousing a positive human philosophy. If people are given free choice to meet their own interests, good things follow, both personally and economically. It takes a laissez-faire view of government's role in people's lives (minimal, Defense of their subjects from without [defense of the realm] and protection from within [laws, police and courts]), otherwise let people handle their own affairs in any way they see fit within the confines of criminal law. It really means that left to our own devices, we, collectively, through our interactions will develop a set of business norms or laws or generally accepted behavior. It assumes that people are basically good, there are always exceptions and ways to try to deal with such individuals, and will form whatever bonds they need because it is in their interests to do so (sort of akin or exactly like Adam Smith's Invisible Hand notion [Adam Smith, in his book "The Wealth of Nations" published in 1776 and was the forerunner to the Chicago school]).

This is as opposed to Keynesian economics that basically says that government should be very active in the economy (stimulate)(borrow and spend in a recession/down time and reign in budgets, presumably with tax increases, to pay off the debts incurred during recessions in expansion cycles). The problem with this Keynesian notion is that it seems to fall apart in practice with governments unable or unwilling to decrease their spending during the boom times so that the debt is not paid down and then there is more borrowing and spending during the next down cycle. Again, it is like a Marxism, sounds good in theory (some aspects) but does not work in practice due to the influence and self interest of people. Government intervention distorts the decisions people make or can make and thus distorts the economy.

I know there are those who would vociferously disagree and I tend to sense it is due to an assumption that man is basically bad and needs guidance or coerced into being good. They would point out how simplistic my arguments are. They are that way because I do not want to bore anybody, though it is occurring anyway and it is more for background. That to me is the interesting thing. Two groups of people, looking at the same thing, using different basic assumptions and coming with two, very different theories. The big difference is at the assumptive level, and that is the hardest part to prove as fact, given the differences in how people do act.

To make a long story short, Milton Friedman, who was 94, was flagbearer for all those who assume that people are basically good. I wish him a fond farewell into the next realm, whatever or wherever that is. Have a great weekend and ciao!