Streetwise Professor

July 31, 2012

Happy Centenary, Milton

Filed under: Economics,Financial crisis,Financial Crisis II,History,Politics — The Professor @ 8:51 pm

Today is Milton Friedman’s 100th birthday.  I consider myself his intellectual grandson.  He was the thesis advisor to my thesis advisor (Lester Telser).  There is a strong degree of affiliation between his views and mine-not surprisingly, since he decisively shaped the intellectual environment that shaped me.

Even though he has been dead six years, Friedman remains an influential figure-and a polarizing one.  Indeed, the financial crisis and subsequent economic turmoil have intensified the battle over his legacy.  Today you can find numerous encomiums to Friedman today.  But to many, he personifies the capitalist or “neo-liberal” ideology that wreaked economic havoc.  The controversy over the Milton Friedman Institute at Chicago, right at the height of the crisis, is one example.  Or Naomi Klein’s screed Disaster Capitalism, which identifies Friedman as the main intellectual architect of said disaster.

Part of the reason that those on the left feel free to bash him is because he isn’t around to defend himself or his views.  And the fact that he was so effective as both a scholar and a polemicist is part of the reason he is so despised on the left.  He got in their heads in the 60s and 70s, and has never left, even though he has departed this earth.  Almost singlehandedly he challenged the professional consensus within economics (the reigning Keynesian orthodoxy) and the political consensus throughout the country (big government liberalism), and although he did not vanquish either, he certainly put them on the defensive.  He debated and wrote and argued prolifically and tenaciously, and like some modern David slew many Goliaths.  His main adversary at the time was Paul Samuelson.  Yes, Samuelson was a great economist, but he is not remembered today either in economics or society at large the way Friedman is.

The sad thing is that the left routinely excoriates Friedman as inhumane, when he was in fact anything but.  He passionately believed that liberty was good for its own sake, but that it was the best way to alleviate human misery and encourage human development.

I wish Friedman had lived to comment on the financial crisis of 2008, and the slow motion crisis in Europe right now.  I am sure that he would have given those who lay the blame for these at his feet (and those of his intellectual and political acolytes) more than they could handle.

Happy Birthday, Milton.  You are missed, but your influence lives.  Everyone passes on, but the ideas of a select few live on far after their passing.  Milton Friedman is one of those few.

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  1. Speaking of University of Chicago PhDs, I caught a lecture on C-SPAN2 today that was given by Steven Landsburg. Interesting lecturer. Not quite Pirrongian wit, but interesting nonetheless.

    Comment by Charles — July 31, 2012 @ 9:21 pm

  2. Props to Milton Friedman. His PBS series’ remain the best programs ever on television-it must have been divine intervention that he agreed to make them and PBS agreed to show them.

    Comment by pahoben — August 1, 2012 @ 10:17 am

  3. Did you see the Knight Capital collapse ? Despite that, I guess hf market making is here to stay.
    But interesting coincidence that you were getting nostalgic about the disappearing floor trading just a couple of days ago…

    Comment by Surya — August 2, 2012 @ 2:21 pm

  4. Yes, I definitely saw that, Surya. Seems like a case of Darwinism in action to me. HF market making is here to stay, and those who aren’t careful will get blown up. HFT speeds up trading, and also speeds up and amplifies the potential for big, costly errors. Those who make the errors won’t survive. Hence, the natural selection aspect.

    The price impact was short-lived, and the biggest effect was to transfer wealth from Knight’s shareholders to the people who were able to buy (sell) at artificially low (high) prices. A nice object lesson that other HFT firms would be wise to take very, very seriously.

    The ProfessorComment by The Professor — August 2, 2012 @ 4:30 pm

  5. Have you seen this before, Prof? Shame Moore didn’t take a lesson from this.

    Comment by Tim Newman — August 2, 2012 @ 11:32 pm

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