Capitalism and Freedom in 2010.

Over on Epinions, my review of Capitalism and Freedom is up. There's a bit too much chapter-by-chapter commentary, making it a more tedious read than it should be, but there's so much confusion about what's in this book that it's worth it.

Have a look at the dopey remark and ensuing exchange in the comments section. People who blame Friedman or Chicago School economics for Chile's early 1980s recession are ridiculous: since when did Chicago Schoolers advocate fixed exchange rates and government favortism of industries, in this case, copper. Moreover, it's about time--just as is the case with global warming denialists--that we start calling lies lies and liars liars. Anyone who believes that Friedman was "sent" to Chile, that Friedman advised the Pinochet government in any meaningful sense of the word, or that Pinochet was a Chicago School "True Believer" and that this motivated repression needs to be shamed, as none of these statements have any basis in fact. They were lies when student radicals made them up in the 1970s and they remain lies today. More than 30 years later, there's no excuse for believing them, especially with Wikipedia and dozens of articles setting the facts straight immediately available.

Milton Friedman Insitute controversy continues.

For fellow spectators of the tempest in a teapot at the University of Chicago, a few updates from around the Web:

It appears that the name of the institute has been changed to the Milton Friedman Institute for Research in Economics. That doesn't look like much of a change to most of us, but perhaps it will mollify the paranoid sort who thought that the Milton Friedman Institute would be some "right-wing think tank". Nevermind that the Institute was being established for economics research even before the name was extended. Nevermind that Milton Friedman can hardly be considered "right-wing". The complainers' position didn't make sense from the start, so perhaps what is a non-change to sensible people will look like substantiative change to them.

If I could buy stock in silly remarks about the economics profession, it would be a great countercyclical asset. The recent economic downturn has brought out the bozos and resulted in all sorts of strange categorical pronouncements about free markets, the Chicago School, or some special "free market economics" separate from the rest, that nobody knows about. This piece from Al-Jazeera English is representative; search the blogosphere or even the newspapers and you will find many more just like it.

Therein, Robert Lucas says what needs to be said:

...Why don't you ask these guys [critics] what should be done specifically and what should be done now?

People like [Josef] Stiglitz [the US economist and critic of free markets] use name-calling instead of just diagnosing the problem and saying what should be done.

Should there have been regulation to prevent this? Well sure, but what sort of regulation? Let them spell out what regulation we should have in place.

These are the questions any reporter who wishes to be an asset to his profession (Ms. Brown at Al-Jazeera, take note!) must ask. If the Chicago School is to blame, what peculiar normative advice was given that was wrong and resulted in the financial situation we are now facing? Did Milton Friedman and his fellows at the University of Chicago (hardly a single-minded group!) advocate for the peculiar FNMA (Fannie Mae) policies that largely caused the housing bubble? Did they advocate against splitting up "too big to fail" Fannie Mae and Freddie Mac? Did they say that the systemic risk problem didn't exist in the credit-default swaps market or elsewhere? Why blame the house Frank Knight built?

Elsewhere, Gary Becker makes a strong case for naming such a research institution after Friedman the man. Richard Posner addresses the concerns of those who think that the Institue will reflect poorly on the University or produce only servile work in honor of Friedman, and takes a great jab at the "'Free market' econ is dead" set:

If the religion professor who is leading the movement against the naming is right that "Friedman's over"--that the current economic crisis has consigned Friedman, along with Greenspan, to the dustbin of economic history--he should have no fear that the new Institute will be biased in favor of Friedman's views. If a physics institute were named after Albert Einstein, would the institute's researchers reject quantum theory?

How many more times do we have to hear this narrative?

Repeating it over and over won't make it true, nor will it change that it is the product of intellectual laziness and a sign that the commentator is passing on opinions third-hand.

Consider anthropologist Marshall Sahlins's take on Milton Friedman and the "Chicago Boys", in this week's Chronicle of Higher Education:

Does the university expect us to "disappear" the memory of the Friedman-trained Chicago Boys, who supplied the economic programs for the draconian regimes of Augusto Pinochet in Chile and the generals in Argentina? The sacrificial reduction of social values to monetary calculations is the essence of Friedman economics, and helps explain its historic taint as the complement of state terror.

Let's put aside the silliness embodied in the noun "Friedman econcomics" and consider the following:

• Augusto Pinochet only became aware of "El Ladrillo", the Harberger- and Friedman-trained "Chicago Boys"' economic whitepaper, after the coup d'etat.
  
• "El Ladrillo" does not call for the repressive policies used by Pinochet and his allies in consolidating their overthrow of the socialist Allende government.
  
• Martinez de Hoz, Argintine Minister of Economy during most of the National Reorganization Process, was Cambridge-educated.
  
• de Hoz's disastrous monetary policy centered on a very tight control of exchange rates. Friedman was an advocate of either "automatic" gold standards or freely floating currencies and quite opposed to manipulation of exchange rates.
  

The idea that repressive practices of some of the regimes--why doesn't Sahlins mention China, the UK, or the United States under Carter and Reagan?--which received Chicago School advice or put such recommendations into practice have foundation in the thought of Milton Friedman is prima facie ludicrious, and Sahlins doesn't even implicitly reference, let alone make a case for, such a link. A reading of Capitalism and Freedom, a very "thin" book well-suited for airplane rides or the café, would reveal to Sahlins that Friedman was quite the advocate of free political institutions and an open society, and that he advocated liberal economic policy in part because it makes the first more likely and reneders the second possible.

Perhaps among left-wing academics, Milton Friedman is a mythical catch-all bogeyman, a folk demon. Can we get an anthropologist on the case?

U. Chicago announces Friedman Institute; Norberg demolishes Naomi Klein

It would be an exaggeration to claim that Milton Friedman singlehandedly restored to economic liberalism a sound intellectual footing, but he nevertheless was both the towering giant of postwar economics and the US's foremost defender of liberty in the latter half of the 20th Century.

Today the University of Chicago announced that, to honor his contributions (and, of course, to attract contributions and entrench its prestige), it will establish the Milton Friedman Institute.

Explains Gary Becker, in the University's announcement:

The Institute will build on this important tradition by focusing on research questions that support development of economic models grounded in economic theory and empirical evidence and designed to evaluate a variety of questions related to economic policy.

Nearly as soon as Milton Friedman slipped in the tub, those whose ideologies are incompatible with Friedman's intellectual legacy began to attack it, sometimes with a savage dishonesty that could not have been brought to bear were he here to defend himself. Naomi Klein, author of The Shock Doctrine, is the prime example.

That Klein distorted history and failed to fulfil the affirmative duties of the scholar is already well-known. Tyler Cowen summed up the trouble with her book in his review. Earlier this week, the Cato Institute released a more extensive, and damning, rebuttal, penned by Johan Norberg. Were Klein an academic, I could say she was headed for ruin, Michael Bellesiles-style. Since she's merely a more industrious version of the common Che Guevara t-shirt wearing, "people before profits"-screaming lout, nothing of the sort will happen, although thinking people will be less likely to take her claims at face value in the future. Joseph Stiglitz is, of course, excepted.

This week's score: 2 for respect for the dead, zero for the radical Left.

Why left-wing reactionaries:

One of the benefits of keeping a messy apartment is stumbling on reading material while cleaning up. From "The Tide in The Affairs of Men", Milton and Rose Friedman, Notes from FEE, December 2006:

...Success made residual evils stand out all the more sharply, both encouraging reformers to press for governmental solutions and making the public more sympathetic to their appeals.

Friedman was writing about the "Progressive" tide in the early 20th Century, but this could very well be a partial explanation of why medical treatments that would have been tantamount to magic in our great-grandparents' day are now considered "rights" by many who haven't thought things through.