IMO a lot of his theories sound really good — especially to those who lean toward market fundamentalism (Austrian School folks, Rothbardian right-libertarians, Randian objectivists, neoliberals, etc.). And Friedman’s self-confident style of discourse — often pedantic and even combative — has added to his appeal…again, especially for certain kinds of personalities and ideological leanings. And one lasting truth is that Friedman does have some interesting ideas, and that some of those ideas have what we might call “partial merit.” Friedman’s monetarism is a good example, since it only holds true under very specific conditions — conditions that support a relatively constant and self-adjusting velocity of money. And since there have been short periods where this kind of predictability and stability were available, Friedman’s views were vindicated by the use of monetary tools at those times. But when new variables have been introduced into the picture — indeed when the larger, longer and predictable macroeconomic economic cycles are taken into account — then the stability of monetary velocity and long-term “neutrality” break down…and break down fast. And Friedman’s prescriptions break down right along with them.
There are things I like about Fiedman — his promotion of guaranteed minimum income, for example — but, like many of his other ideas, there isn’t a lot of evidence to support the efficacy of that approach. And…and this is the really important point IMO…there is a LOT of evidence that whenever Friedman or his Chicago Boys got involved in economic policy in a given country or region, things got pretty bad for those populations. All around the globe, developing countries in particular are still reeling from the structural adjustment policies, aggressive privatization, loosening of government regulation and other bad advice that Friedman promoted over 40+ years. And this is why economists are “giving up” on Friedman’s ideas…not because they don’t have “partial merit,” because they do. But they also — by and large — have had pretty disastrous results whenever they were not implemented within, and constrained by, what is essentially a more Keynesian macroeconomic framework.
In this particular case (the linked article for the OP’s question), the “permanent income hypothesis” again sounded really good — reasonable, predictable, rules-based. Friedman was a genius at bringing order to chaos. It’s just, well…people, and markets, and the consequences of economic policies, and the highly variable inputs and outputs of all human systems, remain pretty chaotic regardless of the rules (or, in this case, expectations) imposed on them.
My 2 cents.
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