tomorrow I will watch the second video in the PBS series: <embed id=VideoPlayback src=http://video.google.com/googleplayer.swf?docid=-2253962402015490587&hl=en&fs=true style=width:400px;height:326px allowFullScreen=true allowScriptAccess=always type=application/x-shockwave-flash> </embed> and also post some key points from the first video...
All you sharp academics on ET should read Prof. Lucas's Papers out of the University of Chicago. He may very well answer all those questions you have on Prof. Friedman and his idea on "Capitalism". enough said.
I believe Friedman was upset that The Bank of the United States(one of the largest commercial banks) was not bailed out(Or 'saved') in the Great depression and its failure lead to runs and panic. He said that on 'Free To Choose'. You might want to seek comfort to your extremist views with Murray Rothbard
Thanks for all comments. Did not get a chance to watch the second PBS video tonight but will do so by this weekend and post some comments. I notice that another thread about Friedman has popped up in the last 24 hours so I will also read through this when I get the chance. But some initial thoughts... When comparisons are made with the Great Depression the tendency is to be too simplistic. The pre-WW2 period was a time when government spending as a proportion of GDP was less than 10%, I think I heard it was nearer 3% at the time of the railroads. Today it is over 40% in most of richer nations... It is clear that Freidman favoured much lower taxes and government spending than seen today, which is why I tend to think he would not look kindly on bailing out large corporations, as the Treasury/Fed did in 2008-09. Though of course, bailing out a bank when there is systemic risk is not the same as bailing out a manufacturer or retailer.. And pre-WW2 you would often get general price declines of 5-10% or more some years without it necessarily being a Great Depression. Wages were not as sticky those days, The Great Depression of 1929-32 saw much bigger wage and price declines of course. Yet today people fret when there is even the possibility of CPI turning slightly negative, as it did in Japan for much of last decade. The point is, Friedman advocating "money printing" to prevent the Great Depression is too general a statement. He would certainly advocate some increase in money supply to counter the declining velocity of money, it seems all a question of degree. And Japan did avoid a Great Depression, the question is, how could they have fared better, and is the US and Europe on the same path, or can it be avoided? Many questions...
posted this in another thread thought it would work here Classical economic thought was developed by British thinkers thomas malthus, david ricardo, and adam smith.The heart of this ideology was the theory of comparative advantage which states that a nation or region should stick to what it's good at and not try to compete were another may have a temporary advantage. And this would produce the most wealth. It is not by accident that this theory was founded entirely by the British who had the most industrialize economy in that period. Of course it's only natural for the most industrialized nations to popularize economic thought that basically said we can produce better and cheaper then you so don't try to industrialize. . This kept other nations from trying to put up tariffs,while trying to develop competing industries, which allowed Britain to dump cheap imports below the cost of production to destroy industries in infancy (Industry needed long term capitol commitments and time to develop). While on the surface it seems that comparative advantage makes logical sense it was merly a way ( just like it is used today)for rich nations to keep poor nations from mechanizing and remain a raw material provider to the rich nations. classical economics also thought that lowering the cost of goods to their cost of production would create the most wealth. This included driving labor down to it's subsistence level ( the cost to live). Of course they admittingly not able to reconcile that if wages were at subsistence levels. who would buy the production. Although Marx name is often used by the right every time the government steps in.Marx basically thought that classical economics that leaves labor with a subsistence life will lead to an uprising and be replaced with socialism so why not do it now. Both of these schools of economic thought didn't understand were wealth came from. Both thought that since the earth resources were finite then so is wealth. They also believed that wealth was a zero some game. A struggle for a finite amount of wealth between the capitalists and labor. Not knowing to many is what is called the lost science of political economy or the American system. Even after the revolution America was still a economic colony of the British. That is until thinkers like henry clay, friedrick list, peshine smith, mathew carey,and others broke free from economic thought of old. Identifying that even though resources are finite man's ability to use these resources is endless. America instituted state collages for advancement in agriculture, chemistry and so on. As a result of education and tariffs to protect new industries America out mechanized the British. Friedrick list brought this doctrine to Germany instituting MIT type collages across Germany which lead to the fastest growing economy the world has seen. Mathew Carey thought it was silly to not peruse textile manufacturing simply because the Brits had a head start an thus a momentary advantage. America ended up developing it's own textile industry that was able to compete with British textiles. Milton Friedman took free markets to the extreme using false assumptions and child like circular logic. Markets should be left alone because markets are the best at maximize utility and how do we know this, because individuals always act rational (false assumption) and how do we know this, because individuals are always maximizing their utility. This became popular because it gave an idealog that doesn't require any thought or empirical evidence just clever slogans and assumptions. Examples: Assuming that the financial industry would regulate itself, as Greenspan thought, assumed that upper management actually cared about long term survival of their institution. This is the hypocrisy of Friedmanites. Upper management would be maximizing their utility by extracting money in the short term, yet for some reason they would have the company and financial system's best interest in mind. Other friedmanites argued that seat belt laws increased deaths by making the driver feel safe enough to take more risk. (Even after car deaths went down) Other friedmanites argue that people who commit suicide are maximizing their utility (personal gain) and how do we know this, well because the core of our theory tells us that individuals always maximize their utility. Obviously Freidmanites are more of a cult then an economic discipline and should not be taken seriously.
"Empirical evidence" though does not create an especially strong argument in favour of economies where government influence has been greater. The great Post WW2 experiment where East and West Europe was partitioned is about as good an example as you will ever likely to get. Or North/South Korea, and many other examples. I know this argument sounds simplistic. And it is. But it is enough for me to lean towards Friedman rather than Krugman. I'm not sure I could motivate myself to "explore the ideas of Paul Krugman", but perhaps I will revisit Keynes one day! George Soros seems to be a fan of Keynes, and although you sometimes wonder if Soros has lost the plot, he did live through Communism and Nazi Germany so I suspect he could contribute more to this discussion that most of the ET onlookers
all robust economies have come from protectionist policies.Germany and U.S. pre WWI. Hitlers Germany still baffles economist on the quick turn around. Japan, U.S. post WWII. Using South Korea as an example of free markets is laughable. South Korea is a highly protectionist country. comparing it to North Korea and concluding it is a free market based on North Korea is misleading and idiotic. Latin America 70-90 Africa 90-2000 Are examples of highly liberalized markets (free) Through the super national bodies the WTO, IMF, world bank. Structural adjustments were imposed on these undeveloped nations. which included mass deregulation, selling off public infrastructural to private investors (usually well below market price). lowering wages to extreme levels. By any measure these experiments in neo libreal economics is a complete fail. These have been the most liberalized (free) markets in history.Countries have gotten poorer, health has gone down, and education has suffered as well. there is the "empirical evidence" were is yours It sounds like you're more interested in finding an economic persona to follow on twitter then learn about economics.Most People treat it like a sports team trying to find a hero to cheer for because you like the way talks our he lines up with the preconceived notions you have. Understanding economics is hard work. The most contributing persons are not the ones glorified in the media there just good at self promoting.
you sure like to generalize and extrapolate I think I understand why economics used to be called political economics based on your emotional remarks