Milton Friedman — too radical for the IPA, too pink for the CIS

When Milton Friedman visited Australia in 1975 the Institute of Public Affairs declared it "a breath of fresh air." But their enthusiasm had limits.

"Friedman is a proponent of the free market doctrine in its purest form" said the IPA Review (vol 29 No 2). And for an organisation that still treated Menzies as a champion of liberalism, this was a problem. Friedman argued that government "should be kept to a minimum" and act primarily "as a referee to ensure fair play and to maintain competition." The IPA found this alarming.

In the severely theoretical sense, Friedman is no doubt correct. But one must have some doubts about the realism of views held and expressed in such an uncompromising form. The days have long gone — if they ever existed — when pure free trade was a tenable doctrine, or when Government could restrict its activities to "keeping the ring."

No wonder free market enthusiasts embraced Greg Lindsay’s Centre for Independent Studies (CIS). After attending a 1978 conference on the role of government, Paddy McGuinness declared that, at the CIS, Friedman was a pinko.

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Jason Soon
15 years ago

well, to be fair I think the IPA have become more radical since then.

Rafe
15 years ago

Almost on topic, in case anyone wants to know what I think about the great Rand-reading champion of freedom, Malcolm Fraser.

http://catallaxyfiles.com/?p=2096

Don Arthur
Don Arthur
15 years ago

Jason – and the CIS has become more conservative?

I’d love to read a Friedman obit by ‘bad’ Peter Saunders. As a sociologist he’s critical of pure economic approaches to policy. He’s certainly no fan of Friedman’s negative income tax proposal.

Nicholas Gruen
Admin
15 years ago

At about the same time as Paddy was saying it, David Friedman, Milton’s son was doing a few seminars at the ANU and arguing that his Dad was a pinko. One of his seminars was on the Icelandic system of law enforcement being outsourced to the private sector. If you had a grudge against someone you held some kind of auction to see which bounty hunters would bob him at the best price. Someone said ‘But what happened to Icelandic Society. Friedman said “it collapsed” but only after a few hundred years which is at least as good as we’ve done”. A reasonable point.

Jason Soon
15 years ago

I remember reading that Paddy article in some anthology but have forgotten what it was about. But it was about some particular policy proposal of Friedman’s and not his whole system.

whyisitso
whyisitso
15 years ago

1978 eh? It couldn’t have been long after Paddy’s conversion from the Left, which he was still espousing strongly in his days that “The National Times”.

Jason Soon
15 years ago

Re Iceland, according to this article, just to satisfy everyone’s burning curiosity
http://www.mises.org/story/1121

Iceland collapsed in the year 1262, 290 years after it was founded. Roderick Long points out that it only took 85 years for the United States to have its first civil war. That Iceland lasted so long is impressive.

The collapse did not occur until after almost three centuries of relatively peaceful living had gone by. Roderick T. Long states, “We should be cautious in labeling as a failure a political experiment that flourished longer than the United States has even existed.”

When one truly looks at Iceland’s history objectively, one can see what the real causes of Iceland’s collapse was. The lack of competition and the monopolistic qualities that eventually came about when five families cornered the chieftaincy market was one reason. These five families bought the majority of chieftaincies. They controlled the court and legal system to a significant extent. This meant that there were not as many chieftains to choose from. This led to less competition, creating opportunities for increased exploitation over the free farmers, eventually leading to a revolt against the 5 families.

Roderick Long also addresses the fact that the introduction of the tithe in 1096 may have aided in the collapse of Iceland. The tithe was a tax paid for the upkeep of the Catholic Church and to pay church officials. The only stipulation was that the money appropriated to the upkeep of the church went to the private landowner (usually a chieftain). It is also no surprise that the chieftains were exempt from paying this property tax. Chieftains had expropriated earnings from free farmers and the free farmers had no way to keep the chieftains in check.

Corin
15 years ago

Jason, that decline sounds similar to the ALP fiefdoms? All fighting over ‘not much’ …….

Question: To the economists in you all – does Freidman represent the triumph of publicity/ political position over nuance? In short, I mean was he as great as he is famous?

Andrew Leigh wrote this .

Nicholas Gruen
Admin
15 years ago

Friedman didn’t have the brilliance of Samuelson, Arrow, Solow or later on people like Gary Becker. None of his achievements involved a high degree of technique and Hayek was a much more creative and profound political thinker.

I agree with Andrew Leigh that another weakness of Friedman’s thinking was that he didn’t ‘do nuance’ as they say these days. I remember thinking this when I saw him debate economists in the mid 70s in Australia about inflation. I distinctly recall people trying to pin him down about cost push inflation and the various dilemmas it involved for policy – he just redefined their problem as a demand pull one driven by too much money chasing too few goods. It’s not that that wasn’t a point worth making – at root there was something to his argument. But it really came across as a very disciplined debating style, but not a very helpful way of engaging with intelligent people with different views to your own.

The two things I admire most about Friedman are both related to these limitations mentioned above. He kept things pretty simple. That meant that

1. He came up with and popularised lots of simple ‘thought experiments’ which later found their way into policy – HECS style income contingent loans, congestion taxes, vouchers.
2. He regarded himself as methodologically in the spirit of the line of the discipline which went from Marshall through Keynes (yes Keynes) to himself. He regarded Keynes as a great economist and was very sympathetic to his method even if he disagreed with Keynes’ conclusions. He never bought the over mathematisation of the discipline – and was into relatively simple stories and stylised facts doggedly dragged out of the data. That helped him play the little boy pointing out that the emperor had no clothes when his work with Phelps put the skewer through the vulgar Keynesianism that held that there was a stable tradeoff between inflation and unemployment. As Friedman and Phelps argued – the phenomenon couldn’t be understood without understanding expectations in the economy.