Friday, November 17, 2006

Friedman is gone

To blog about anything except Milton Friedman's death seems unthinkable today. And yet I have nothing new to contribute. I'll just mark this sad news by pointing to Friedman's obit in The Financial Times (h/t happyjuggler0).


Milton Friedman is my hero. After some thought, I do have something to say.

In the comment section of this post I was asked, “So what should the Canadian government be doing, as per your idol Friedman, that it is not already doing?”

My response made me realize two things. I realized how much of an influence Friedman's ideologies have on me, even if some of my opinions aren't consistent with his. I also realized that it's only been over the past four months (since I began this blog) that I've become a libertarian (with the most un-libertarian moniker around). It may have taken even longer, or not at all, had it not been for Friedman's influence.
Despite all of his great contributions to economics, one thing that will continue to influence me is the assertiveness in which he defended his values. The sheer strength of Friedman's backbone gave courage to people to defend their freedom, or to do so more confidently. As George Shultz once said of Friedman when he found himself defending a freedom he felt strongly about, “It's as if he were there with me.”

Here's a post that I enjoyed from Tyler Cowen: When I think of Milton Friedman.


amphimacer said...

As a Canadian commentator, let's see what you can do . . .

Friedman's prescription didn't really work when the Reaganites tried it out, because it's not a practical prescription, but a description of some specific matters relating to inflation and the money supply. Of course he was right that inflation is slowed only by decreasing the money supply, but there are a hundred ways to do that, and a thousand things that can skew whatever is done.

So what should the Canadian government be doing, as per your idol Friedman, that it is not already doing? We have a free-ish economy and a government committed to reducing government oversight, (thus freeing the market further), but we also have had two Bank of Canada governors who have been devoted above all else to controlling inflation. Has this been an unalloyed good?

true dough said...

You left me an awful lot of wiggle room, but I've tried to keep this tight and limit myself to 5 points, in no order.

I should say though that I do like the direction that the government's going. It's certainly not going the wrong way. Further, I think Dodge is doing a great job at the BoC. Suggestions:

1.Remove the forces that hinder the performance of the BoC. There are too many things making the BoC's job difficult. Two key things here: i) There is too much interference by politicians. eg. the finance minister has too much discretionary power; ii) our welfare state makes inflation control riskier than it need be eg. The Canadian Mortgage and Housing Corp. What are they thinking?! Let's privatize it or at least hand it over to the provinces.

2.Smaller government. One reason why: Our EI system is being used and abused. This is the case in New Brunswick and yet firms are importing Russians to work in fish plants. Maine has state funded EI and they don't have such a problem. This could be for a number of reasons, but I happen to think that large government is one of them.

3.It's time to bring the inflation target down to 1.5 or 1%. While I've played with the idea of a non-discretionary version of the explicit numerical definition for a price stability objective (akaBen Bernanke's most recent proposal) in the past, I maintain that Canada's regime of inflation targeting has been successful in encouraging employment and stable prices without too much tampering from authorities. It's not very Friedman-esque, but it's a system that people are familiar with and it's one that doesn't attract the skepticism that it once did. Still, I agree with David Laidler's reasoning: 2% is really too high today.

4.A short term goal of lower corporate taxes.

5.I really like the idea of something like an Earned Income Tax Credit or a negative tax credit, although I haven't read as much on this as I'd like to.

Comments/criticisms anyone?