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Thread: Milton Friedman

  1. #1

    Question Milton Friedman

    I have a fairly quick question, Milton Friedman, as a great of an intellectual as he was, did he belong to the Chicago school of economics or the Austrian school of economics? If he is an Austrian, why are none of his books available for sale at the Mises institute? I appreciate your answers ahead of time.



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  3. #2

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    Quote Originally Posted by InPaulWeTrust View Post
    I have a fairly quick question, Milton Friedman, as a great of an intellectual as he was, did he belong to the Chicago school of economics or the Austrian school of economics? If he is an Austrian, why are none of his books available for sale at the Mises institute? I appreciate your answers ahead of time.
    Chicago ,ofcourse -and he was a bad libertarian in my opinion -especially monetary policy wise

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    He was Chicago. I used to watch his sho when it would come weekly on public TV. He was who it was named after , he taught at the University of Chicago.


    What was that show called again?

  5. #4

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    Free to Choose was the program...

    I actually watched a few youtube videos on him and rather appreciated some of the things he said regarding a limited role played by government on society.

    Here are the links:
    Part1:
    http://www.youtube.com/watch?v=0PaN9...eature=related
    Part2:
    http://www.youtube.com/watch?v=KUDV0...eature=related
    Part3:
    http://www.youtube.com/watch?v=zhgy0...eature=related
    Part4:
    http://www.youtube.com/watch?v=64mr-...eature=related

  6. #5

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    He was a Chicago-school economist.

    He has some great Libertarian philosophies on the Free Market, lack of regulation, and civil liberties, but his monetary policies (IMHO) sucked really badly.

    You see, Friedman thought that we should mandate a set amount of inflation each year, either based on population growth, or the money supply would be increased/decreased by a computer based on the growth of the economy. Therefore, under a Friedmanite system, you would have inflation no matter what....and, essentially, you would have to invest in something, somewhere to avoid getting your savings wiped out (this would not occur under a gold-based monetary system).

    His videos are great, IMHO, but if you have people watch them, be sure to point out the follies of his monetary theory.

  7. #6

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    Quote Originally Posted by Dsylexic View Post
    Chicago ,ofcourse -and he was a bad libertarian in my opinion -especially monetary policy wise
    He wasn't a bad libertarian. He advocated individual liberty, small government, and a whole host of other libertarian views. The only thing I think he was wrong on was monetary policy, and even there he was better than most.

    But to answer your question--he was from the Chicago school. At this years FFF conference Lew Rockwell took a question about Milton. Listen to it at about 4 minutes.

    http://www.youtube.com/watch?v=rEPjX3ETwyg
    Last edited by Unspun; 09-27-2008 at 12:25 PM.

  8. #7

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    I think he did a bit of harm praising the central banks for doing a good job merely because they starting using more monetarist principles. People think that Alan Greenspan was great minus the 21st century where he lowered rates to 1 percent because we had disinflationary forces during when he was chairman--I don't know if they fail to realize the reason we didn't have high prices for goods is because we're importing a lot on the cheap; it had little to do Greenspan's performance which was inflationary as hell. Then they say we didn't have any major recession under him. So what? Fact is, central banks fail, they will always fail, they suck. I can't believe so many "libertarians" defend and support it.

  9. #8

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    I have not fully heard his views on monetary policy as of yet, but his videos are fairly informative and he seems to be a great advocate of limited government. His video on education is extremely good. I agree with his views on this, specifically with the abolition of the department of education.

  10. #9

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    Chicago school. Milton Friedman's "Capitalism and Freedom" is what formally introduced me to libertarian thought, so I have a soft spot for him. His monetary theory is more than a little shaky though.
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  11. #10

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    Quote Originally Posted by Fox McCloud View Post
    He was a Chicago-school economist.

    He has some great Libertarian philosophies on the Free Market, lack of regulation, and civil liberties, but his monetary policies (IMHO) sucked really badly.

    You see, Friedman thought that we should mandate a set amount of inflation each year, either based on population growth, or the money supply would be increased/decreased by a computer based on the growth of the economy. Therefore, under a Friedmanite system, you would have inflation no matter what....and, essentially, you would have to invest in something, somewhere to avoid getting your savings wiped out (this would not occur under a gold-based monetary system).

    His videos are great, IMHO, but if you have people watch them, be sure to point out the follies of his monetary theory.
    Please don't bash Friedman, he was a brilliant economist and a great libertarian. (Not referring to you specifically, Fox, just everyone in general)

    However, when you look at the "expanding the money supply to a rate equal to inflation" theory, it would be significantly less inflation than we have now. So I wouldn't be so hasty to dismiss it just because Austrians disagree. (I am an Austrian believer but I still think we should at least be open to Friedman's teachings as well.)

  12. #11

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    A coworker of mine is an economist by training and a big fan of Friedman. He recently told me that he had bought the Revolution and was coming around to Ron's reasoning for a gold standard in light of recent events.

    We were discussing the Austrian theory of the Business Cycle the other day and he said that if Friedman were alive today he would probably agree with it. He said Friedman's objection was that it wasn't able to be used mathematically to do predictions.

  13. #12

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    Quote Originally Posted by FunkBuddha View Post
    We were discussing the Austrian theory of the Business Cycle the other day and he said that if Friedman were alive today he would probably agree with it. He said Friedman's objection was that it wasn't able to be used mathematically to do predictions.
    you do have a point; in his earlier days, he thought the Federal Reserve was a sound institution, it's just that they didn't manage money policy very well (this was his "3% a year/population growth" days), and it was towards the very end of his life that he finally became very skeptical of the Fed and instead wanted a computer to manage the money supply based on mathematical formulas.

    Would he have made a full 180 and supported gold as money? Who knows, but I would certainly hope so.

    Also, Bassmouth, I wasn't bashing Friedman, as a matter of fact, I said I liked him, except for his monetary policies. And yes, while I agree that system would be better (provided the computer's formulas weren't manipulated), it still requires the power of government to ultimately mandate that someone use their currency (which gives it its value)...which is still coercion. Not only that, but you still are mandating inflation, which I have a huge problem with. Still, I do agree, it would be better, but far FAR from perfect.

  14. #13

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    He wasn't that great or brilliant.....

    Austrain>Chicago. I also think some of his views were misguided.
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  15. #14

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    Gold is nice, but I think some people place too much faith in it. Life is generally not real simple. And if you think there is one simple right answer to the question, then you're probably wrong. Central banks can create inflation by manipulating the money supply, but under a pure gold standard gold miners can create inflation too. The best thing about gold, is that it is durable and probably retains value even if the state disintegrates. The fact that central bankers can't create gold out of thin air does act as a forced restraint on government spending, but that can also be a bad thing during a crisis when you might want flexibility in the ability of the government to react.

    I think Freidmans ideas about a computer program fed are not too bad. The only thing that system lacks as far as I can tell is the long term security of savings that physical gold provides. I've also heard Steve Forbes talking about structuring fed policy so that the dollar is fixed at a certain price ratio to gold. That doesn't sound like a terrible approach either.

    I think a decent compromise would be to remove taxation on converting between dollars and gold, so that people can freely shift their wealth back and forth between fiat and commodity money.
    Last edited by SeanEdwards; 09-27-2008 at 08:35 PM.

  16. #15

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    I have been studying Friedman stuff for years. I actually lean a little more towards Chicago School than Austrian mainly because they weren't as hard line on philosophy. Every once in a while you have to throw the utopian philosophical ideals out and start thinking about how you can make things better as they are.

    Go read a few of Milton's books. You will find that he prefaces every topic with the notion that they are not the completely best method. He gives ideas for how the current system could possibly be reformed into a better one. For example--negative income tax. He clearly said that it was not the best system, but that the ideal system is not achievable with the current political powers. So he came up with ways to introduce the markets slowly.

    I think that kind of mentality was brilliance. He did not continuously cram utopian ideals, even though he may have believed them to be the best. He used real world situations to try to give examples of how we could make people MORE free. He knew it would be a long time and close to impossible to get everyone COMPLETELY free, so he chose his battles one step at a time.

    By the way, I need to find it, but I read an interview of his where he said that a true gold standard would be a great idea. Some people have read his views about how it's not feasible to go to gold again and they assume that he is some kind of supporter of paper money. All he said was that in the international situation we have, it is completely infeasible for the United States to single-handedly go to a gold standard. And he wasn't so sure that a paper money standard with proper controls couldn't achieve the desired results for us anyway... without the negative side effects that were had during gold standard years.

    Another thing he gets knocked on is the consistent inflation idea. Remember that when he spoke of this, he meant true monetary inflation. Increase the money supply by a few percent each year and stick to it. Price inflation would probably be a lot less than that as the new money was absorbed. If you don't think that 2-3% inflation rather than the 10-20% we get now would be better, then you need your head checked. Once again, this is the case of people looking for the ideal utopia, which will never exist. It's impossible to have zero inflation or deflation, even in a gold standard. So in that sense, Friedman hypothesized that it could be possible to use the paper money standard to achieve what even the gold standard couldn't do... that is, a low level of expected and maintainable inflation.
    Last edited by scooter; 09-27-2008 at 07:39 PM.

  17. #16
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    Milton Friedman was trained in Chicago economics. His views did evolve over time as he examined and considered them.

    If you are interested in some of his view on libertarianism, here is the first of a series: http://www.youtube.com/watch?v=0PaN9M4WwHw

    I do disagree with his contention towards the end of this segment about pollution being worse in Russia because they have more government involvement in life than here. We have cleaner air because we have more government regulations about how much pollution can be created.
    Last edited by Zippyjuan; 09-27-2008 at 08:47 PM.
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  18. #17

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    bernanke belongs to the friedman school of thought. they both think that the great depression could have been avoided by pumping 4 billion dollars into the economy(a bailout similar to todays). any self respecting austrian economist would see the absolute danger caused by such actions.

  19. #18

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    For a good comparison of the Austrian and the Chicago school, check out:
    http://www.amazon.com/Vienna-Chicago...2606070&sr=8-3
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  20. #19

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    Quote Originally Posted by Dsylexic View Post
    bernanke belongs to the friedman school of thought. they both think that the great depression could have been avoided by pumping 4 billion dollars into the economy(a bailout similar to todays). any self respecting austrian economist would see the absolute danger caused by such actions.
    not true. later in life he realized that this was wrong and reject keynes.

  21. #20

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    Read, "What Has Government Done to Our Money" by Murray Rothbard. He talks about Friedman's idea of a slowly inflating money supply.

    Fact is, economic expansion is based off of savings. If you have a deflating currency, ie appreciating in value of time, you encourage savings because people will be getting wealthier just by holding onto the stuff. The more savings you have, and the more responsible your lending, then the greater your economy will grow.
    "Anarchists oppose the State because it has its very being in such aggression, namely, the expropriation of private property through taxation, the coercive exclusion of other providers of defense service from its territory, and all of the other depredations and coercions that are built upon these twin foci of invasions of individual rights." -Murray Rothbard

  22. #21

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    Quote Originally Posted by InPaulWeTrust View Post
    I have a fairly quick question, Milton Friedman, as a great of an intellectual as he was, did he belong to the Chicago school of economics or the Austrian school of economics? If he is an Austrian, why are none of his books available for sale at the Mises institute? I appreciate your answers ahead of time.
    Yeah, he was a Chicago guy. Remember the "chicago boys" that went to advise Pinochet? Were they from the Chicago school? Hmm. I liked Milton, I just think that he was too compromising. Negative income tax? pllleaseeeee

  23. #22

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    Quote Originally Posted by JosephTheLibertarian View Post
    Yeah, he was a Chicago guy. Remember the "chicago boys" that went to advise Pinochet? Were they from the Chicago school? Hmm. I liked Milton, I just think that he was too compromising. Negative income tax? pllleaseeeee
    Yeah I like the idea of some sort of consumption based tax and a monetary system backed by sound money. The power to tax is the power to destroy. Why not encourage savings through people not losing wealth due to inflation and at the same time encouraging less consumption.

    Have you guys ever read the monetary reform act. I think it was highly influenced by Friedman's later work.

    http://www.themoneymasters.com/mra.htm





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