Thursday, August 2, 2012

Bryan Caplan Loves Milton Friedman (And he will go to hell because of it)

Milton Friedman may have loved John Maynard Keynes, but next to Caplan's love for Friedman, the Friedman love of Keynes looks like mere puppy love.

In a column titled, I kid you not, An Ode to Milton Friedman, Caplan writes:

Today would have been Milton Friedman's 100th birthday.  I only met the man long enough for him to sign my copy of Capitalism and Freedom, but he's been a tremendous influence on me.
All of my other adolescent intellectual heroes - Ayn Rand, Murray Rothbard, Ludwig von Mises - gradually came to seem less impressive in my eyes.  But the greatness of Milton Friedman is as constant as the Northern Star.
Puhleez, I never got Friedman to sign as much as a tax withholding form that the bastard designed, but I did hear him speak on at least two occasions. The first occasion was in the early 1980s, when he was predicting a crazed inflation that never came, based on his loopy, rigid belief in the monetary equation MV=PT. He never got the V he expected, since he assumed that would be something fairly constant and it turned out not to be. So in many ways his forecast, based on a faulty assumption of a constant (in this case V), was a precursor to the blow up of Long Term Capital Management and later the subprime mortgage syndication business, which both were designed by econometricians who followed Friedman into the room where variables are magically assumed to be constants.

The second time I heard him speak, the audience was allowed to write down questions that he would answer. I aksed on my card if he felt at all guilty about designing the withholding tax. The question was never read to him.

Caplan writes:
Friedman makes his points as simply, clearly, and bluntly as possible.  He never rambles on.
Is Caplan seriously comparing Friedman's style in being blunt with that of Rand, Mises and Rothbard? Friedman played a much more skillful close to the vest political game than Rand, Mises or Rothbard. He was awarded the Nobel Prize in economics and the Presidential Medal of Freedom.  Rand, Mises and Rothbard were never awarded such prizes, which are never ever awarded to the blunt.

Friedman also was a member of Ronald Reagan's President's Economic Policy Advisory Board, another position that is never give to a true warrior that will always speak the truth.

Caplan concludes by writing:
In a just world, we'd all be Friedmanites now.   
What crap is this? In a just world, Friedman's monetary equation, his positivist methodology, his education voucher system, his negative income tax and his withholding tax, would all be thrown into hell along with him, where he could play central planning games with Keynes, Marx, Stalin, Mao,and eventually Caplan.


  1. Caplan is a weird person, and his head is too wrapped up in statistics and mathematics to actually think about economics. He's just an academic hack loving on another academic hack.

    1. Not to take away from your caplan bashing but i feel i have to defend him by saying that he is one of the few non-austrians who have accually engaged austrian economics and tried to disprove it, something few other neoclassicals do, and i think its comendable.

  2. Milton Friedman did not regret his role in creating the withholding tax, but he wanted it removed after the war was over. "I have no apologies for it, but I really wish we hadn't found it necessary and I wish there were some way of abolishing withholding now."

    I'm a pacifist, but I don't think that supporting the Allied war effort in WWII is such a horrible crime that people should be condemned to hell for it. Look at Ludwig von Mises' writings on the Axis powers, in Omnipotent government:
    "But if we pass in review the political activities of the socialist and communist parties in the Western democracies, we can easily discover that they did all that they could to encourage the Nazi plans for aggression. They have propagated the doctrine that disarmament and neutrality are the best means to stop the Nazis and the other Axis powers. They did not intend to aid the Nazis. But if they had had this intention, they could not have acted differently."

    "These considerations are not a plea for opening America and the British Dominions to German, Italian, and Japanese immigrants. Under present conditions America and Australia would simply commit suicide by admitting Nazis, Fascists, and Japanese. They could as well directly surrender to the F├╝hrer and to the Mikado. Immigrants from the totalitarian countries are today the vanguard of their armies, a fifth column whose invasion would render all measures of defense useless. America and Australia can preserve their freedom, their civilizations, and their economic institutions only by rigidly barring access to the subjects of dictators. But these conditions are the outcome of etatism. In the liberal past the immigrants came not as pacemakers of conquest but as loyal citizens of their new country."

    And if one supports the American cause in WWII, it hardly seems wrong to support a withholding tax to pay for it. How else was the war to be funded--more inflation? People can get caught up in the heat of war--it's easy to understand how someone alive during WWII would support wrong-headed interventions like a witholding tax or banning immigrants from countries ruled by dictators.

    I, for one, appreciate not being enslaved to fight in our current wars--thanks in large part to Milton Friedman's efforts to end the draft. He played a more skillful political game than Rothbard, and it worked. "In the course of his [General Westmoreland's] testimony, he made the statement that he did not want to command an army of mercenaries. I [Milton Friedman] stopped him and said, 'General, would you rather command an army of slaves?' He drew himself up and said, 'I don't like to hear our patriotic draftees referred to as slaves.' I replied, 'I don't like to hear our patriotic volunteers referred to as mercenaries.' But I went on to say, 'If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.' That was the last that we heard from the general about mercenaries."

    This is probably much the same thing Rothbard might say about the draft--but he would never have been given the opportunity to say it before Congress. I'm glad that Friedman did have that opportunity, thanks to his skillful political game.

    I disagree with Friedman and agree with the Austrians about monetary policy, vouchers, a negative income tax, etc--but being wrong isn't the same thing as being evil. He supported vouchers and a negative income tax because he thought they would bring us closer to the laissez-faire ideal. He may have been wrong about that, but that's an intellectual error, not a moral one--if those things would have brought us closer to laissez-faire, he would have been right to support them.

    1. "He supported vouchers and a negative income tax because he thought they would bring us closer to the laissez-faire ideal."

      How can a rational person believe that universal federal government funding of education, a national guaranteed minimum income and income tax withholding have anything to do with laissez faire economics? Murray Rothbard had his twists and turns during his career as an intellectual but he consistently denounced all of these foolhardy policies with his usual insight and wit. Friedman tried too hard to influence policies in the short run while ignoring the probable long term effects. That kind of reckless pragmatism is dangerous.

      Having said that, Friedman did do some good along the way, but you give him too much credit with regard to conscription. The intense unpopularity of the Vietnam War killed the draft, not Milton Friedman. But he was on the right side on that issue as well as other issues like drug legalization, privatization and deregulation(except in money and credit of course). He was also a prominent critic of Keynesian fiscal policies. I suppose you could reasonably conclude that he did more good than harm during his life but he had a very spotty track record that doesn't deserve the kind of sycophantic enthusiasm expressed by Brian Caplan.

    2. I don't think it's unreasonable to think that those things are closer to laissez-faire then the current system. We already have national funding of education and welfare--Friedman's changes wouldn't nationalize these things, it would just change them. I agree that he's wrong, and should have considered the long-run effects--but I don't think he's a bad person for being wrong.

      I think Friedman's work to end the draft had more influence than you think--Vietnam turned the public against the draft, but Friedman convinced the military and political elites to go along with it. Public opinion alone generally isn't enough for this sort of thing--the Vietnam War was unpopular among the public years before it was actually ended.

      Having any significant role in ending the draft, along with introducing free-market ideas (even flawed and incomplete free-market ideas) to hundreds of thousands of people is much more than enough to outweigh any harms he's caused. The only harms I can think of are education voucher systems that have been implemented in a couple places--his ideas on monetary policy might also count, but I think the economists he convinced were mainstream Keynesians before anyway, so that's more of a sideways change than a negative one.

  3. Continued from other post (over the character limit)

    The differences between Milton Friedman and Rothbard/Mises aren't really that big compared to the differences between Friedman and what the average person believes. Even if his ideal is wrong, he influenced people in the right direction with the hundreds of thousands of books he sold all across the world. The difference between Friedman and Rothbard seems especially insignificant when considering influence on countries outside of the West, where the ideological debate is often about whether markets should exist at all, rather than what monetary policy should be.

  4. So where is all the inflation that the Austrians have been talking about, let alone the hyperinflation they say will come.
    Are you saying that the Rothbard who worked for Buchanan, the one who thought Clark was too anti-immigration, but then turned paleo-conservative and adopted the Hoppe line. Hmm seems like someone is part of a Rothbardian cult.

    1. As I have pointed out many times, Rothbard was all over the map with his political alliances. He was a political junkie and had to be in the game. Anyone pulling out a specific alliance and saying "look here" has no clue as to what made Rothbard tick. He was a diehard anarchist who would hook up with just about anyone to advance the smashing of the state.

      Read his hilarious recounting of his infiltration of the Maoist wing of a Leninist-Trotskyite party:

    2. 1. Firstly, as Bob et al. have pointed out, there is inflation happening. As for the hyperinflation, the Austrians have stated that it is a potential outcome if certain criteria are met and certain actions are taken, just like if you cook eggs too hot too fast you'll curdle the yolks.

      2. Rothbard never "worked for Buchanan." Per Lew Rockwell:

      "So Rothbard often had to make political decisions by weighing the foreign-policy question against a candidate's domestic program. For example, let's fast-forward 40 years to the presidential elections of the 1990s. Pat Buchanan challenged George Bush for the Republican nomination, saying that Bush had made two unforgivable errors: he waged an unjust war against Iraq and he raised taxes. Did Rothbard support Buchanan? You bet. And he worked overtime trying to get Buchanan up to speed on broader economic issues while defending him against the ridiculous charges of the left."

      3. Rothbard never turned paleo-conservative. Try again.

      4. "...adopted the Hoppe line." Sorry, Rothbard begat Hoppe. Try one more time.

    3. Wenzel,Jff
      1. To say Rothbard was not a paleoconservative(Old right)is to say that Rothbard was a lair, he says he is one of the last ones left

      2.Rothbard endorsed Bush in 92. If one cared about advancing liberty then why would they endorse Bush, and it seems Cato is a lot more liberty friendly than Bush yet i hear lots of trashing of it.

      3. "Did Rothbard support Buchanan? You bet. And he worked overtime trying to get Buchanan up to speed on broader economic issues " Lew Rockwell

      4. Look at Rothbard view on immigration when he was talking about the Clark campaign, then look at it in Nations by Consent: Decomposing the Nation State. Rothbard fliped floped to the conservative position of Hoppe.

    4. You're using a very loose sense of "worked" for him. Educating someone in the hope that they're less of a tyrant isn't quite "working" for him.

      As for immigration... well Hoppe has a pretty good case against a welfare state coupled with immigration.

    5. In campaign it is working, you are using a narrow definition of work that would be limited to the use of physical force, like his job as a professor educating students, so yes he worked for him.

      Again look at what he wrote about immigration for the Clark campaign, it pretty much debunks the Hoppe case, but then Rothbard did a Romney flip-flop on the issue to try to get more conservatives on his side.

      So I am pretty much in agreement with Caplan, though I for me I first saw Friedman as a great economist, then Rothbard while looking down on Friedman, and now I am more of a White-Selgin-Garrison Austrian, i think Rothbard was a bad monetary theorist, great historian,and alright political philosopher, while Friedman was a pretty overall economist.

  5. Friedman called Hayek's "Pure Theory of Capital" incomprehensible. Friedman couldn't understand Hayek and neither can Caplan. He has proven that in his diatribes against Austrian econ.

    Austrian econ is just too difficult for some people to grasp. So they latch on to simplistic explanations they can get their heads around.

  6. Guess who else really liked Milton Friedman

    The death of economist Milton Friedman last week at the age of 94 marks a great loss for advocates of freedom everywhere. He was perhaps the most successful free-market economist of the 20th century, in terms of his real-world impact on politics and policy. Many modern politicians, including Ronald Reagan, considered him a major influence in their careers.

    Milton Friedman was a strong advocate of economic liberty who opposed government intervention in both the purely economic and broader social spheres of our society. He believed not only in laissez-faire capitalism, but also the larger cause of individual liberty in the political sense.

    I was proud to know Dr. Friedman for many decades, and considered him a friend. I can assure you that he was no ivory tower academic, but rather an engaging and active man who worked very hard to demonstrate the applicability of economics to everyday life.

    Ron Paul

    Unlike, Ron Paul has class!!

    1. OH boy, so does this mean the "cult" has been broken up? I disagree with Dr. Paul.

      Friedman was at the end a government technocrat, who did technocratic things, such as design the witholding tax, an education voucher system and a "negative" income tax,

    2. Bryan Caplan's friendly libertarian approved of compulsory schooling, too. Funny that Caplan doesn't explain how it could be friendly or nobleminded to finance such schooling through intimidation and extortion, as is most likely to be the case with compulsory schooling.

      Also, Friedman preferred to be called a liberal, which is odd given that at first glance he seems to have so little in common with leftwing busybodies who adopted the word liberal as a cloak for their illiberalism.

      See page 5 of for Friedman's confession about compulsory schooling. It's worth reading all the way through, however.

  7. I think Austrians are way to hard on Friedman. He of course was way off on monetary policy, negative income tax, vouchers etc. But as many have pointed out he was an excellent advocate for free markets and got a lot people on the path to Austrianism(myself included) by stressing the importance of monetary theory.

    I personally think it's a big deal that he said that inflation is always a monetary phenomemon when the government line at the time was that inflation was like a plauge or natural disaster. Or even worse was the consumers fault(any one still have a WIN pin courtesy of Gerald Ford). Not to mention his bringing the quantity theory of money to the forefront.

    Friedman has way more positives than negatives and enough in common with Austrians that he shouldn't be totally discounted because of his inconsistancies. They should be brought up of course but should't paint peoples' entire opinion of him.

    A good example is Rothbard's admiration for Thomas Paine. Rothbard brings up his ideas on freedom, his decimation of the majesty of royalty etc. Paine also had some screwy ideas, for instance a social security like old age pension that the Social Security Administration of today recognizes as one of the first such proposals, and other egalitarian schemes. My point is that Rothbard didn't let those inconsistancies override the positives he saw in Thomas Paine's thought.

  8. Michael,

    American intervention in WWII was one of the greatest disasters in world history. Because of American involvement, one tyrant was defeated to benefit a much worse tyrant whose evil political system, communism, engulfed half the world for decades to come. Communism resulted in far more deaths than Nazism, with some estimates reaching 100 million people.

    Also, the Allies themselves, like the Axis powers, committed mass murder and mayhem throughout Europe and Japan. It was the Allies, namely Churchill, who initiated the war crime of bombing civilian cities, and this little-discussed holocaust -- in Germany, German-occupied areas, and Japan -- resulted in the deaths of more than a million civilians. After the war, the Allies' brutal occupation policies in Germany resulted in the deaths of millions of people, and FDR's Morganthau Plan, though only half carried out, would have resulted in the deaths of 10-20 million Germans, as the FDR administration itself admitted.

    Learn the truth about this insidious war. Mises was wrong about WWII. Rothbard, as usual, was right. The U.S. and Great Britain should have stayed out of it and let the two tyrants duke it out to the death, weakening each other in the process. Of course, when we call Hitler and Stalin tyrants, we should realize that the Allied leaders, FDR and Churchill, were also tyrants who also dismantled the liberties of their people and killed millions. The latter were merely held back from total tyranny by the waning libertarian traditions of their respective countries.

    It's high time that all libertarians acknowledged the truth about WWII -- that it was not about good versus evil but evil versus evil. Furthermore, it's time to acknowledge that the more evil side -- Stalin -- won.

    1. I agree with you about WWII--as I said, I'm a pacifist, and don't support the American intervention in that war or any other war. My point wasn't that Friedman and Mises were right, it was that their support at the time was understandable. We can look back on it now and see why they were wrong--but it's harder to do that at the time.

  9. Wow! Good to know that Bob Wenzel is the arbiter of who goes to hell. And really? Milton Friedman and Bryan Caplan are equivalent to mass murderers like Stalin and Mao? You are a demented human being Wenzel, seek help...

    1. Ur ah, Caplan is the one who raised the idea of a "just world", I think Wenzel is just having fun with that.

    2. Milton Friedman helped to arrange the financing for mass murder. He financed also a war to make the world safe for Uncle Joe and his team of do-gooders. You should be grateful that the worst war financed thus far by the affable egghead of the Hoover Institution on War, Revolution, and Peace was a puny little fission bomb war.

      I am reminded also of how wrong Christians and Muslims are about their threats of hellfire and eternal damnation. The punishment with which they manace us, fallible beings, would not fit the alleged crime of disdaining their primitive, half-baked superstitions. In fact, why would an intelligent, omnipotent, and omniscient god need or want to tolerate eternally the contamination of its property with toxic souls like Friedman's or Stalin's? A more plausible hypothesis is that the god, if it exists, would annhiliate all such souls after making a few careful notes about their flawed design.

      Unfortunately, there doesn't seem to be any evidence that the omniscient manufacturer of material reality is willing to implement a few beneficial changes to the design of humans or to the physical laws which limit their operation. Perhaps the god, too, is flawed, although it's unclear how to reconcile this suggestion with its alleged goodness and perfection. So, for this and other reasons I suspect that no such god as those of the Muslims and Christians exists. If this world was created by a god, then that god is more like a computer nerd or vivisectionistic scientist than most computer programmers and scientists would care to admit. And this should concern us all, for we know how such people tend to be.

  10. I'm tired of the Friedman bashing. He's dead, he's being commemorated on the 100th anniversary of his birth, and he did more for human freedom in his life than did Mises and Rothbard. (It remains to be seen if their scholarly works end up being more important.) So what if Ayn Rand was wrong about many things, she still changes minds with her books, as Milton did with his books, Newsweek articles, and PBS series. I don't agree 100% with anyone, but like Harry Browne, I try hard not to denigrate people that think they are working for freedom.

    My freedom path was roughly an innate anti-authority personality, to Heinlein, to Friedman, to the Libertarian Party, to the Lew Rockwell blog. I don't agree with any of them completely (including my personality!) but we need to acknowledge the many paths to freedom. It's also why I am so frustrated with Ron Paul bashers; in my mind he has surpassed Friedman as the #1 all-time beacon for people to discover liberty.

    1. Who cares? Stalin is dead too.

      "and he did more for human freedom in his life than did Mises and Rothbard."

      Hmm... like what? The withholding tax? Ridiculous monetary expansion in the UK and US? Whining about the Fed not printing enough during the GD? He did and said some good things.

      Do you see a Friedman revolution going on globally right now? Do you see Friedman mobilising youths across the world or risking death to ensure his ideas are passed on a generation? Friedman got a lot of air time and spoke well. So what? Wanna compare Friedman to Mises?

      I've no issue with Friedman other than his more statist detours. Friedman is denigrated because in many ways he sold out intellectually and bore the mantle for compromising. This is why we dislike him. Not because he is a competitor to Mises. Quite frankly, on the theoretical level, he was brilliant but Mises outranks him.

    2. Caplan is the one who came out and said that Mises and Rothbard were less impressive in his eyes. He said Friedman is as constant as the Northern Star. He even says in a just world we would all be Friedmanites. You think Austrians should just stay silent when stupid nonsense like this is put out there?

    3. I've always thought the LRC and hatred of Friedman was a little overwrought...but now wishing him to hell with Stalin and Lenin??? Good grief.

    4. We're aiming to destroy the state, not replace it with something a little "nicer" or more efficient.

  11. @Michael Annes
    At last a sane voice from the real world.
    Thank you.

  12. I think fancy equations and colorfful graphs are to economists what toy trucks are to children. Caplan felt left out that he didn't get to play with the same toys as the other kids, so he kicked sand at the Austrian kid building a sand castle in the corner by himself, and joined the others. The rest is just apologetics.

  13. Friedman definitely had some statist ideas, especially in taxation and monetary theory. Like Ayn Rand, he was a mixed bag.

    Someone just recommended to me his son David Friedman's book. Apparently he is a utilitarian ancap.

  14. I have a hard time nailing down my feelings for Milton Friedman. When he was on his game, defending the free market, nobody could touch him. I love watching him tear down Marxist college students and explain the absurdity of things like price controls, but that's not his modern legacy.

    These days he's being used as a whipping boy by Paul Krugman and Brad DeLong. Whenever you challenge a Keynesian on monetary policy the FIRST THING they do is invoke Milton Friedman. He's the best friend our enemies ever had.

    You want to be an immortal and beloved intellectual? Betray your conservatism in one crucial way that supports the leftist establishment. A conservative who uses his credibility to discredit other conservatives is a pearl beyond price for these guys.

    Friedman will be remembered forever as the conservative who justified Keynesianism. Krugman and company have essentially made him a patron saint of the Keynesian faith, and that's how he'll be remembered.

    The Friedman you guys should be reading is his son, David Friedman. David is essentially the godfather of anarcho-capitalism. He used to spend his free time trolling Obectivists in the newsgroups, deploying the same arguments he perfected in the 60s, tying them up in rhetorical knots.

    David Friedman (and I suspect he got this from his father) is a strict utilitarian. He absolutely does not think in terms of emotion or ideology or moral principle. His arguments are so ruthlessly practical, they can actually become ludicrous. Read The Machinery of Freedom and judge for yourself.

    My favorite example is his idea of "Jitney Stops" where every motorist essentially becomes his own cab company, agreeing to pick up total strangers from impromptu bus stops for a fee. This, like every other proposal in his book, assumes a degree of trust that seems impossible in our modern society. Nut if you're willing to suspend disbelief and pretend we're all back in 1955, his logic is impeccable.

    David Friedman taught me a lot about debate. I've made the joke for years that I never won an argument with David Friedman but on one occasion I did not lose. These guys are fierce debaters, truly remarkable intellects.

    Your average Marxist or Neosocialist won't even make them break a sweat, so I'm not surprised to see Milton canonized by guys like Reagan and Bush. But like all great intellects, their conclusions are only as good as the evidence they allow into their equations. Their logic is perfect, but if you run clean equations with bad data, you're still going to be wrong.

  15. This might be a bit late, but wow some of you Rothbardian Austrians really have no appreciation for realism. Ignoring the withholding tax and some of the monetary policies Friedman prescribed, most of the supposedly "statist" policies he advocated for (like the minimum income tax) were done with the goal of reducing the reach of the state and bringing things closer to his classical liberal ideal. Before the state can be completely done away with (which as an Ancap I favor), it needs to be reigned in as much as possible. At the end of his life, Friedman also had become much more libertarian than you people are giving him credit for. So many internet Austrians just can't stand anyone disagreeing even slightly with their sacred pantheon of writers.