Sunday, August 5, 2012

Boudreaux, Again

Donald Boudreaux is out again with yet another attack, this time in WSJ, on the view of British journalist Nicholas Wapshott that Milton Friedman was in love with John Maynard Keynes.

Boudreaux cleverly limits the discussion on the Friedman essay Wapshott singles out, since Friedman starts off the essay this way:
John Maynard Keynes (1883–1946) is the latest in a line of great British
economists who had a profound influence on the discipline of economics.
Friedman then lists a number of economists such as Adam Smith, David Ricardo, William Stanley Jevons and Alfred Marshall, and writes (my bold):
Keynes clearly belongs in this line. In listing “the” classic of each of these great economists, historians will cite the General Theory as Keynes’s pathbreaking contribution. Yet, in my opinion, Keynes would belong in this line even if the General Theory had never been published. Indeed, I am one of a small minority of professional economists who regard his Tract on Monetary Reform (1923), not the General Theory, as his best book in economics. Even after sixty-five years, it is not only well worth reading but continues to have a major influence on economic policy.
It's tough to paint Friedman as a Keynes-hater with an essay that starts in such manner. Thus Boudreaux finding words written by Friedman later  in the essay attacking Keynes shows, if nothing else, that Friedman was not a very consistent thinker about Keynes. Surely a sign of love, or perhaps love-hate, but not of logic and reason.

Until Bodreaux addresses Friedman's views about Keynes in the starting paragraphs to the essay, Boiudreaux's reviews must be considered seriously incomplete. Further, Boudreaux continues to promote the idea that:
 In fact, Milton Friedman's advocacy of free markets was as principled, consistent and honest as it was brilliant.
To support this claim, Boudreaux must deal with Friedman's key role in designing the withholding tax, call for school vouchers, call for a negative income tax and call for a monetary printing rule---all big government programs in direct violation of free market principles.  And, none of which Boudreaux discusses while throwing rose petals in front of the memory of the government technocrat Friedman. Perhaps, Boudreaux has a blind spot for Friedman, while the rest of us see Friedman's ugly spots.


  1. Any time I hear something about Friedman and Keynes I always think about the stories of Mark Skousen:

    ...Milton and Rose were invited to speak at the New Orleans Gold Conference, an annual gathering of hard-money investors. After Milton spoke, he took questions from the audience. I tempted him with the question, "Who's the better economist, Ludwig von Mises or John Maynard Keynes?" I knew Milton would answer straight; he didn't care what gold bugs thought. "Keynes," he proclaimed to a shocked audience...

    ...Milton turned to me and asked in a serious tone, "Mark, why are gold bugs so passionate about gold?" It was a perfect opportunity to talk about the importance of "honest money," a theme that Ludwig von Mises, Henry Hazlitt, and other Austrian economists have taught for years. I pulled out of my jacket pocket a large oversized $20 banknote, a "gold certificate" issued in the 1920s. Together we read the words spelled out on it: "This certifies that there has been deposited in the Treasury of the United States of America TWENTY DOLLARS IN GOLD COIN payable to the bearer on demand." I then explained, "Milton, we're passionate about gold because under the gold standard, there's a contract between the government and its citizens. For every gold certificate issued, the government had to back it up with a $20 gold coin. Under a genuine gold standard, the Treasury can't just print up money to pay their bills. It's honest money."

    All along, I felt that Friedman was simply playing along, since after all, he was the world's foremost monetary historian. I went on, "So, what kind of contract exists today between the government and its citizens? Milton, do you have a $20 bill?" He reached into his pocket and handed over a $20 bill. "See, the contract has completely disappeared. Now it only says ‘Federal Reserve Note.' And the Fed doesn't even pay interest!" I paused and said, "Milton, this $20 bill isn't worth the paper it's printed on." And I tore it up! I ripped Milton Friedman's $20 Federal Reserve Note into a half-dozen pieces.

    Suddenly, the atmosphere changed. He turned to me and said angrily, "Mark, you had no right to destroy my property!" Rose chimed in, "Yes, Mark, you shouldn't have done that. That was Milton's private property."...Finally, I said, "Well, I suppose you want your money back?"

    ...I reached into my pocket and pulled out a $20 St. Gaudens Double Eagle gold coin, handed it to Milton, and said, “Okay, here’s your $20!”

    He looked startled and stared at the coin. I thought he would be pleased, but I was wrong. Suddenly, he handed it back to me. "I don't want it!"

    I gulped, struggling for words. "But Milton, it's a gift. Here, take it. It's a $20 gold coin, worth a lot more than a $20 Federal Reserve Note."

    "No," he repeated emphatically. "I don't want it."

    After an agonizingly pregnant pause, I finally figured out a solution. Setting the coin aside, I reached into my pocket, pulled out a fresh new $20 paper note, and handed it to him. "There, okay, will this help?"

    He calmed down and took the $20 bill...Milton and I never discussed the coin incident again. (I keep his torn-up $20 bill in my wallet as a keepsake.)


    Funny and absolutely horrifying.

  2. Friedman later went back on the withholding tax. School vouchers are a perfectly defensible idea. Friedman was awful on monetary policy and the ideas of the efficient markets that came out of Chicago. The world is worse for those two ideas. But, so what? He helped break down trade barriers. He kept dying free market ideas alive. Friedman and Stigler's work converted Rothbard to being a libertarian.

    Why is it that Friedman is held to such a saintly standard? Rothbard supported all sorts of questionable people. Many on the left. Rothbard supported Strom Thurmond in college. Are you going to hold that against him. Rothbard supported Pat Buchanan. Is Pat Buchanan okay and not Milton Friedman? He willingly did that later in life. This doesn't take away from Rothbard's great books.

    Milton Friedman is probably 85% great on the issues and 15% not so good. He even opposed the Gulf War and the second Iraq War. He even helped get rid of the draft. Too bad he wasn't like Cindy Sheehan though. He could have gotten away with being 5% good and 95% vile trash and been supported by Rockwell and

    1. I just read Peter Schiff's latest book and I was surprised to learn that he does not advocate ending the fed. I guess LRC and start tearing him apart now.

      I agree completely with your 85/15 analysis. And that 85% did a lot more good than nearly everyone that was 100% good (according to the LRC and Mises crowd).

      Finally...Bob, you could at least get the guys name's Donald Boudreaux.

    2. @russell

      You need to listen to The Robert Wenzel Show more often. I called Peter on it at the beginning of my interview interview with him and at the end.

      I don't play softball like Boudreaux.

  3. @Anonymous, Murray Rothbard never ADVOCATED statist policies and institutions such as school vouchers, the negative income tax, the withholding tax, the Federal Reserve, and anti-trust.

    Also, Rothbard believed in allying with leftists and rightists when their causes and ours aligned, generally when it came to war. This strategy has brought many former leftists and rightists to our side. regularly posts articles by Friedmanites such as Thomas Sowell when they are right on certain issues.

  4. It's Donaldad not David.