David Friedman's Defense of His Father

Hear, hear!

Lew Rockwell’s fetish for Milton Friedman and mainstream economics is truly fascinating. Did Rockwell ever shoot his mouth off about Friedman while Friedman was alive?

Austrians seem to harbor much bitterness at the respect Friedman and his colleagues garnered over the years-a respect Austrians feel entitled to.

Friedman knocked over a few windmills in his time and backed off from some ideas. Friedman was a world class scholar and gentleman.

Austrians should not criticize, but emulate Friedman. Knock down windmills rather than people. Why don’t Rockwellesque Austrians learn mainstream economics before attacking it, I wonder? I suspect they prefer pious vocabulary to disciplined analysis and mathematics.

As people have pointed out in the comments of David’s blog, many (dare I say most?) readers of Rothbard get his books or audiobooks for free at Mises.org. I have listened to many Rothbard essays, and some full books, including vol. 1 of his history of economic thought before smith.

Sure, I have bought M. Friedman books too, but it is possible that Mises.org’s international reputation and free resources have driven his influence *in terms of number of readers* above Friedman’s? It would have been nice if Rockwell had supported his claim with some numbers on downloads from his organization’s site, but alas, Rockwell seems to think it’s simply axiomatic that Rothbard is more widely read (joking).

When Milton Friedman passed, the Mises Institute published an obit that was fairly conciliatory, saying basically that “despite our disagreements over monetary policy, Milton Friedman was a champion of freedom and liberty”.

I also blogged for LRC for about a year in ’07/’08 (focusing on the Paul campaign), and I wouldn’t blog there again. The site is much more visceral and crude than it was then, with people like David Kramer blogging.

On Rothbard, it seems like he practiced “avant-garde economics”, writing papers merely to ruffle feathers and piss people off. Furthermore, he took a “no compromise” position on cooperating with the sate to advance liberty, while Milton Friedman may have gone too far in making compromises with statists.

The Austrian’s biggest beef with Milton Friedman was his explicit cheerleading for a government-ran central bank…he was not a free banker as far as I can tell. Lew also made the insinuation that Dr. Ron Paul is NOT a free banker, which I believe he is: Paul advocates competing currencies, but believes 100% reserve currencies will prevail as the standard.

And finally, Lew & company need to come clean with their explicit role in the whole “newsletter thing” back in the 1980s. Rothbard & Rockwell published those racial-tinged newsletters under Paul’s name (w/o his permission) in order to bring right-wing Buchananite nativists into the movement…100% consistent with avant-garde economics. Dr. Paul is the greatest vanguard for liberty in 3 generations, and if these issues come up again in the campaign, Lew needs to step up and take responsibility…instead of hanging up on reporters when they ask questions.

The Economist editorialist laments that so many conservatives are reading Rothbard, today. He did not write that Rothbard has always been read more than Friedman, or that Rothbard has sold more books than Friedman. He wrote that in the current debate over monetary policy conservatives read more Rothbard than they read Friedman.

Rockwell, exaggerated when he wrote that the whole world is following Rothbard, but David Friedman’s posting of books sales completely misses the point. Most of Friedman’s books sold decades ago. Apparently they aren’t selling today.

BTW, the Economist writer creates a straw man of Austrian economics. That’s typical of the rag. They can’t do battle with the real thing so they make a stuffed toy enemy they can defeat. Hayek disagreed with Friedman’s monetary theory and he was far from being a Rothbardian fanatic. And Hayek disagreed on theoretical grounds, not on moral grounds. Ron Paul’s beef with Friedman is not moral, either. It’s practical and based on sound monetary theory.

Friedman was a Keynesian economist in almost all respects. He did Keynesians a favor by re-introducing them to better monetary theory, but it wasn’t good monetary theory. You need Hayek and Mises for that. Rothbard didn’t advance monetary theory at all.

A google search for “Milton Friedman” returns 7,950,000 results.

A google search for “Rothbard” (not “Murray Rothbard” mind you, just “Rothbard”) returns 3,570,000 results.

Actually, Rockwell asked a question about whether he needed to note that many people are reading Rothbard today while Friedman is unknown outside of academic circles.

The days that Friedman was read monthly in Newsweek are long gone and as the totality of his work becomes widely known his shine fades away.

It seems clear that at least in the liberty movement Rothbard is trending upward while Friedman is in decline.

The title of the Economist article “Missing Milton Friedman” makes this clear.

Blackadder, I could be wrong. Do you have info that the sales figures are for a recent period and not all time figures?

Do you have info that the sales figures are for a recent period and not all time figures?

See here.

Kevin: “many argue that the fact that someone disagrees with Austrian economics is proof positive that they don’t understand it.”

That’s a good point and I see it all too often. However, when I read critics of Austrian econ I usually see factual errors. For example Coordination Problem blog recently had a discussion about a critique of Austrian econ by Krugman and Cowen. http://www.coordinationproblem.org/2011/01/call-all-economists-lets-answer-a-serious-question.html

Here’s a segment of Boettke’s post:

“Tyler brings up an empirical challenge to the pattern prediction of the Mises-Hayek theory that he raised in his important book, Risk and Business Cycles, that “Comovement [of consumption and investment] is an embarrassing empirical fact for the Austrian account of the boom.””

Krugman and Cowen assert that Mises and Hayek wrote that consumption and investment could not increase at the same time. The “embarrassing empirical fact” is that they do.

However, a casual reader of Mises, Hayek, Rothbard or any other Austrian economist will know that they have all insisted that consumption and investment in fact do rise at the same time. It’s in every article and book on business cycles by Austrian economists.

So how can Krugman and Cowen assert emphatically that Austrians claim investment and consumption cannot rise at the same time when every Austrian economist who has ever written on the business cycle insists that they do?

I have a hard time believing that Friedman or Rothbard’s books are currently selling that well, but if so I apologize to David Friedman.

Here’s what I see happened. The Economist disagrees with Ron Paul’s stance on the Fed and its monetary policy and wanted to discredit it. But Mises and Hayek have too much respect to criticize, especially since “Road to Serfdom” is selling so well, so he picks the less respected of the Austrian economists, Rothbard.

But he doesn’t criticize Rothbard’s monetary theory, which he got from Mises. He criticizes Rothbard’s nutty ethics which leads followers to proclaim the state as evil by nature. That way, he can paint all Austrians as nuts and their monetary theory as nutty by association without having to deal with the very sound monetary theory of Mises and Hayek and other good Austrian economists.

It’s assassination by association. Clever, but dishonest.

Stan, interesting post!

I think my main gripe with monetarists is that they seem to think the money supply will never contract unless the Fed forces it to contract. That is clearly not the case.

Credit (one component of money) will easily contract just before a depression because a few debtors default causing bankers get scared and quit lending or even call in some loans.

More people get scared and start paying off loans. As a result the money supply contracts faster than the Fed can act. Or it simply stops growing.

And the Fed does not enjoy absolute control over money or prices. As Friedman wrote, the lags between policy and effect are long and variable. Greenspan said the same thing on a recent CNBC interview. He said the Fed models show a lag of 3 years.

Because their monetary theory is so bad, the Fed can’t predict when money growth will suddenly go flat, or even contract. So they end up acting many months after the fact. Add in the lags and their policies tend to become pro-cyclical.

I think of myself as an Austrian and I disagree with Milton Friedman in some important areas.But I have to say that the sort of post that prompted David’s response is embarrassing. It gives Austrian economics a bad name. Milton Friedman was a great champion of liberty. I’m a fan of David’s too!

I disagree that it was a “mature” Hayek’s position. At one point in the midst of the Great D he succumbed to pressure and suggested that the Fed should find what he called secondary deflation, but that was all. Later he back peddled on that because of the long lags and the inflation that results from pro-cyclical policies.

You have it backwards. Here is Hayek in 1979:

I agree with Milton Friedman that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation. So, once again, a badly programmed monetary policy prolonged the depression.

I like Rockwell, and I think he has contributed a lot to Libertarianism, (LVMI, especially). However….

There is no way Rothbard has a broader appeal among non-economists than Milton Friedman. Friedman did so much to expand libertarianism, while Rothbard did much to divide the libertarian movement with his fixation on purity.

I suspect a lot of the vitriol the anarcho-capitalists direct towards Milton Friedman is because he is especially beloved by the Koch-funded groups, (Cato Institue, Reason Foundation, etc.) The anarcho-capitalists hate the “Kochtopus” for reasons that have never been totally clear to me, since they agree on the vast majority of issues. But that’s the legacy of Murray Rothbard, a lot of division and infighting (e.g. the US Libertarian Party).

“but David Friedman’s posting of books sales completely misses the point. Most of Friedman’s books sold decades ago. Apparently they aren’t selling today.”

The figures I posted were current Amazon rankings, so evidence that the books are selling today. What is your reason for supposing, and asserting, the contrary?

As best I can tell from other people’s attempts to reverse engineer the Amazon rankings, my father’s books are selling about ten times as many copies per day on Amazon as Rothbard’s books are.

I expect the ratio would be considerably higher for total copies ever sold. For one thing, one of my parents’ books was at the top of the non-fiction best seller list at two dates a year apart, which I gather is a pretty rare accomplishment.

Partial cross-post from Ideas:

Friedman’s print and media obituaries ran all around the globe:
• “Milton Friedman, the grandmaster of free-market economic theory in the postwar era and a prime force in the movement of nations toward less government and greater reliance on individual responsibility” – New York Times

• “… it was Friedman who by 1980 supplanted Keynes as the world’s most influential economist.” Sunday Times, London.

• “Milton Friedman, who has died aged 94, was one of the greatest economists of all time. He may come to be included in the same category of pre-eminent figures as Adam Smith, Ricardo, Marx and John Maynard Keynes.” – The Guardian

• “Milton Friedman was the father of monetarism and the prophet of laissez-faire economics. It was his debunking of the economics of John Maynard Keynes which was a major factor in leading to the free market revolutions in Britain and the United States. … he moved the economic consensus decisively to the right.” – The Independent, London

• “Milton Friedman, who has died aged 94, was the last of the great economists to combine possession of a household name with the highest professional credentials. In this respect he was often compared to John Maynard Keynes, whose work he always respected, even though he to some extent supplanted it. Moreover, in contrast to many leading economists, Friedman maintained a continuity between his Nobel-Prize winning academic contributions and his current journalism. The columns he contributed to Newsweek every third week between 1966 and 1984 were a model of how to use economic analysis to illuminate events.” – Financial Times, London

Blackadder, I have read those comments by Hayek before, but I think he differs with Friedman in a subtle way. Hayek was against the Fed reducing the money supply in a depression when prices were already falling. And he thought the Fed should do something about what he called a secondary deflation. However, he never thought that monetary expansion could end a depression as Friedman did. However, he was also skeptical that the Fed could do what he thought it should do because of the long lags. Friedman saw that problem as well.

Milton probably has the grave most danced on of any economist out there.

“The anarcho-capitalists hate the “Kochtopus” for reasons that have never been totally clear to me, since they agree on the vast majority of issues.”

I think the animosity is mutual.

“The Austrian’s biggest beef with Milton Friedman was his explicit cheerleading for a government-ran central bank…he was not a free banker as far as I can tell.”

I do not see how you could describe someone who blamed the Federal Reserve system for both the Great Depression and various post-war episodes of inflation as a cheer leader for a government-run central bank. Can you offer anything he wrote as supporting that position–or, for that matter, attacking free banking?

As best I can tell, you and people accepting your line of argument are confusing two quite different issues–what questions someone asks with what answers he gets. The difference in that regard between my father and both me and Rothbard was the questions. My father’s interest was in how the world as it was could be made less bad. He was prepared to push proposals that seemed unlikely to be accepted, such as abolishing the draft, abolishing minimum wage laws, or floating exchange rates–and two of those three eventually happened.

But he wasn’t terribly interested in the question of how the perfect system would work. His view of my proposals for anarcho-capitalism was that they might work but probably wouldn’t, mine was that they might not work but, given a suitable environment, probably would, and neither of us thought he had a conclusive proof for his views.

All modern economies have central banks, so figuring out what central banks were doing wrong and persuading them not to do it made more sense than trying to get central banks shut down and replaced with private money issuers. The one discussion of free banking that I remember having with my father was when I pointed out that a perfectly competitive free banking system would produce the same outcome–roughly speaking, prices falling at the real interest rate (more complicated if you allow for the costs to the issuers of issuing)–that he had shown in an essay was, in a technical sense, optimal. He agreed.

But the fact that he thought an existing government institution modified in some fashion would be an improvement didn’t mean he thought it would be an improvement over no government involvement at all. On the contrary, at various points he said and wrote that one proposal or another was not what he would want if one were starting with a blank slate, but was what he thought one should be moving to given where we were starting. I’m pretty sure he made that point with regard to vouchers vs an entirely private system of schooling.

P.S.H, great point. In this case, it would be nice to know how much money people are willing to spend to read Milton Friedman versus how much they are willing to spend to read Rothbard. Even if “the whole world” is reading Rothbard (which clearly isn’t the case), the fact that people are willing to spend money on Friedman’s books indicates that Friedman is not “almost a nobody.” People still love Milton Friedman and for good reason.
Thanks for this post, David H.