There’s no way to appreciate fully the contributions of Nobel Prize-winning economist Milton Friedman (1912-2006), who would have turned 99 years old this weekend, to the growth of libertarian ideas and a free society.

This is the man, after all, who introduced the concept of school vouchers, documented the role of government monopolies on money in creating inflation, provided the intellectual arguments that ended the military draft in America, co-founded the Mont Pelerin Society, and so much more. In popular books such as Capitalism and Freedom and Free to Choose, written with his wife and longtime collaborator Rose, he masterfully drew a through-line between economic freedom and political and cultural freedom.

Yet his ultimate contribution to freedom and liberty is found less in any of the specific argument he made and more in the ways he made them. Friedman provided an all-too-rare example of a public intellectual who was scrupulously honest, forthright, and fair in every debate he entered. Whether he was duking it out with fellow Nobel Prize winners and other high-profile economists or making the case for the morality of capitalism with TV hosts such as Phil Donahue and angry students, he always argued in good faith, admitted when he was wrong, and enlarged the circle of debate.

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The Charles Koch Foundation has released a great video that underscores the importance of economic freedom. Milton Friedman long-ago argued that, without economic freedom, all other freedoms are vulnerable.

Swedish economist Johan Norberg is the host of the new documentary Free or Equal, which retraces and updates the 1980 classic Free to Choose, featuring Milton and Rose Friedman. Like the Friedmans, Norberg travels the globe to look at the conditions under which prosperity and freedom flourish – and under what conditions they wither and die. Made by the same producer who created Free to Choose, Free or Equal will be appearing on PBS in 2011. For more information, a clip of the new documentary and the entire Free to Choose series, go here.

Norberg is the author of numerous books, including In Defense of Global Capitalism (2002) and Fiscal Fiasco (2009), a look at how the U.S. government’s policies contributed to and have exacerbated the length and intensity of the Great Recession.

Reason’s Nick Gillespie sat down with Norberg to discuss how the changes in the world since the Friedmans’ earlier documentary effect their basic argument that individual economic freedom is a building block for a prosperous and open society. Overall, says Norberg, the Friedmans’ basic insights hold true and some of the places they celebrated – such as Hong Kong, then under British protection and now part of the People’s Republic of China – are still flourishing. But in countries and regions that continue to constrain economic and political liberties, reports Norberg, fear and privation still dominate.

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Despite the astonishing flood of more than a trillion dollars in new commercial-bank reserves that the Fed created in late 2008 and early 2009, when it undertook to rescue the big banks and other institutions from the consequences of their boom-time mistakes, Ben Bernanke has insisted that the Fed can and will contain this inflationary potential, and he has emphasized that inflation remains under control, indeed, that potential deflation presents the greater danger. He rests his case on the evidence of standard macroeconomic indexes.

Standard measures of the money stock, for example, have not increased greatly. The year-to-year change (ending in January 2011) in M2 was only 4.3 percent; the two-year change, only 6.4 percent. For MZM (money zero maturity), the corresponding rates of change were 2.6 percent and 4.4 percent, respectively. Thus, it would appear that by historical standards money has grown quite moderately in the past two years.

Bernanke and his supporting cast of monetary economists can also point to corroborating evidence that by historical standards the rate of inflation has been modest. The year-to-year change (ending in January 2011) in the all-items consumer price index (CPI) was only 1.7 percent; the two-year change, only 4.3 percent. The implicit price deflator for GDP, the broadest of all price indexes, reveals even less inflation. This index, which is computed on a quarterly basis, shows a one-year change of only 1.4 percent for the year ending in the fourth quarter of 2010, and a corresponding two-year change of only 1.8 percent.

(I have computed all of the figures mentioned in this article from basic data available at the website maintained by the Federal Reserve Bank of St. Louis.)

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In my last post, I explained the best way to end unemployment is an Ebay / Paypal style solution to auction off the “Man Weeks” of our unemployed:

1. All registered workers are guaranteed an income of $10,400 per year, at least $6 per hour.  The minimum bid is $1, and the government uses current Unemployment Insurance I monies to add up to $5.
2. Current UI ends after 90 days.  To receive any extra aid of any kind (food stamps, Section 8, energy assistance, etc.) able bodied workers must register in this system. They receive a Debit Card where their pay is deposited every Friday.  They can choose to earn less, but they cannot decline to work and get GI.
3. We are all allowed to bid on any worker’s Man Week, as long as we have first deposited the money to cover the bid in the system; no credit will be extended.  This bid covers employer taxes, workers compensation, everything soup-to-nuts.

Below you will find the pay schedule I’m suggesting, but first I want to talk about a gorgeous side effect of this plan: it ends illegal immigration.  In fact, it actually causes current illegals to deport themselves.

The reason is simple: When farmers can bid $4.00 per hour to have unemployed American citizens pick the grape crop, they will no longer hire illegals.  You get the drift?  Immediately, there will be no jobs open to illegal immigrants.  Since (in this $4 case) the government is adding $3.50 per hour, the US citizen is earning $7.50 ($15,600 per year).

We’ll leverage the extra pay provided by the government (money we spend anyway) to end demand for non-citizen workers.

Notice that we don’t need to staff up the Immigration Department to chase down coyotes; we don’t need to raid companies looking for illegal immigrants; we don’t need to build a wall across Mexico; we don’t need to waste time passing harsh laws.

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The Great Depression has been a deeply contested subject from the very beginning. After John Maynard Keynes’s General Theory became sacred writ for most mainstream economists, Keynesian interpretations generally prevailed, notwithstanding pockets of resistance among older economists, in general, and Austrian school economists, in particular. Milton Friedman and Anna Schwartz’s monumental Monetary History of the United States eventually helped to displace Keynesian interpretations with a monetarist interpretation, especially after the stagflation of the 1970s worked to discredit Keynesian macroeconomics.

Nevertheless, in part because mainstream macroeconomics never settled into a fixed orthodoxy for very long, competing interpretations of the Great Depression continued to attract adherents and to incorporate new elements of analysis during the past thirty years. The Austrians, once again attracting young economists to their ranks from the 1970s onward, persisted in waging guerrilla warfare against Keynesian, monetarist, New Classical, and other varieties of interpretation of the Depression.

With the onset of the current economic troubles—what some call the Great Recession—the debate about the Great Depression flared up anew, because many commentators began to compare these two episodes of exceptionally subpar overall economic performance. In 2008, an article by Gauti Eggertsson, “Great Expectations and the End of the Depression,” was published in the leading mainstream journal, the American Economic Review. This article advances a variation on one of the leading themes among mainstream economists, attributing the U.S. recovery after 1933 to a regime change associated with the New Deal’s abandonment of the gold standard and its commitment to active intervention in the private economy, allegedly in sharp contrast to the Hoover administration’s hands-off policy stance.

Steven Horwitz has taken issue with Eggertsson’s article in an important critique published in 2009 in the online journal Econ Journal Watch, edited by Daniel B. Klein. Eggertsson replied to Horwitz’s critique in 2010. Now, Horwitz has rejoined this back-and-forth in a new contribution to Econ Journal Watch titled “Unfortunately Unfamiliar with Robert Higgs and Others: A Rejoinder to Gauti Eggertsson on the 1930s.” No one will be surprised if I recommend Horwitz’s original critique and his follow-up piece as important contributions to this highly significant debate.

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A Schwarzenegger hangover saved California Democrats from a wipeout as the Tea Party wave washed harmlessly up the High Sierra’s eastern slope.  Democrats won eight of nine statewide offices, with the race for attorney general looking more Republican as the late ballots get tallied.  Democrats also racked up their largest State Assembly majority since the Watergate blowout year of 1974 (52 seats of 80).  And, the passage of union-sponsored Prop. 25 allows Democrats to enact a budget with a simple majority vote.  But for visual confirmation of this election’s connection to the failed “Republican” governor, one need only look at governor-elect Jerry Brown’s ad showing Arnold Schwarzenegger side-by-side with Meg Whitman uttering the same platitudinous inanities we’ve come to expect from self-funded dilettantes who neither have the time to vote nor the inclination to first seek a lesser office so as to gain political experience.

It isn’t hard to see where things went awry in California: just look back to the heady years of the historic 2003 recall of Gray Davis.  Davis was swept out of office due a massive deficit brought on by his rapid expansion of state government during the dot com economy combined with his mishandling of the state’s electricity crisis.  Candidate Schwarzenegger won on a platform of “blowing up the boxes” of bureaucracy while “cutting up” the state’s “credit cards” – Schwarzenegger did neither.  Instead, he gave California seven years of uneven leadership, veering from the right to the left while calling his erratic leadership “post-partisanship.” Schwarzenegger pushed through the largest state tax increase in U.S. history, expanded government spending, debt and regulatory hurdles while shrinking the sphere of liberty – curious actions for a self-avowed fan of the late Milton Friedman.  Schwarzenegger’s voter approval rating hit 22 percent this summer, matching Gray Davis’ recall-eve rating – something Davis, if he wishes to indulge in schadenfreude, might see as poetic symmetry.

While the Democrats had a great election night in the Golden State, there are some signs of hope for the majority of Californians who don’t take their ideological cues from San Francisco.

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I have to say, I never thought I’d read a blogger on NRO endorse the notion that all of the money you earn belongs to the state. I certainly never thought that read it twice in a year. But here we are, again . . . and I feel compelled to engage in an excruciating debate with Robert VerBruggen of Phi Beta Con.

Question: Is there any substantive difference between the government cutting you a check and cutting your taxes?

VerBruggen agrees with the Progressives on the Supreme Court I wrote about recently: Nope, all your money is the government’s!

But his odd insistence that government checks and tax cuts are the same began months ago, when he expounded more extensively if not coherently on this same subject.

I attempted to illustrate where he had gone wrong in his thinking by taking his positions to an extreme. To my surprise, VerBruggen agreed with my modest proposal to eliminate all charitable tax deductions and credits and capitulate comprehensively to the welfare state

More specifically: “The feds should eliminate the charitable tax deduction and send out the average (tax-forgiven) amount donated per adult to every citizen in the country to donate as they wish!”

VerBruggen supports a “charity entitlement” over charitable tax deductions. He favors a “social security” model for “kind of a ‘forced charity’” over tax deductions.

I’m not sure if he’s thought his rather radical and odd argument through to the end point.

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If he were alive today, Saul Alinsky would be beaming over President Obama’s Labor Day speech at the Milwaukee Area Labor Council Laborfest. It hit all the right divisive, class-warfare notes, each one sounded to prod the down-trodden Have-nots into even greater envy of the evil Haves. And to no one’s surprise, the Milwaukee mice were more than happy to take the bait—cheering, smiling, applauding, even as the metal bar of the mousetrap is about to snap their necks.

Despite campaigning for the office as the Great Unifier, once in it Obama displays over and over his preferred role of Great Divider. His true talent is not in uniting America, but in fomenting, fragmenting, fracturing it. He wields his Alinskyite ideology like a giant chisel, cleaving America into two fractious lumps of stone, probably beyond reunification, at least under the current will-of-the-people-ignoring administration.

The first third of Obama’s 3422-word oration is dedicated to a platitudinous paean to America’s historically aspirational work ethic, a flattering, feel-good affirmation no one could disagree with. Even so, early on, Obama hints at the class-envy rhetoric that later wall-to-wall carpets his speech:

When I was still a candidate for this office…we talked about how, for years, the values of hard work and responsibility that built this country had been given short shrift…about how some on Wall Street took reckless risks and cut corners to turn huge profits, while working Americans were fighting harder and harder just to stay afloat.

In the Alinsky-Obama world paradigm, it’s always Us (the working downtrodden) versus Them (the non-working, reckless greedy). In the A-O paradigm, the housing bubble was unilaterally caused by rapacious brokers and bankers, while borrowing-beyond-their-means Tulipomaniac home-buyers are absolved of all blame.

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I pose this question seriously, not as a physiologist, but as an economic historian. I am provoked to raise the question by an advertisement that Amazon sent me recently, calling my attention a book titled Can Capitalism Survive? Creative Destruction and the Future of the Global Economy. Seeing this sales pitch, my immediate reaction was my usual sadly amused reply to such a question: Can capitalism survive? What an odd question! Assuming that capitalism ever existed at all, it has been dead for at least a century.

At first glance, I did not recognize that the book being advertised is one for which, in a sense, I am responsible. It turns out that the “new” book is only an old (portion of a) book, now adorned by a new subtitle and two new introductory paragraphs by the Newsweek columnist Robert J. Samuelson. If I reveal that the book’s author is Joseph A. Schumpeter, many readers will recognize it immediately as Part II of that famous economist’s best-known work Capitalism, Socialism and Democracy, first published in 1942, with subsequent editions in 1947 and 1950.

The new book’s front cover has a blurb from Fortune that declares Schumpeter to have been “the most influential economist of the twentieth century . . . a major prophet.” The back cover has an embarrassingly superficial blurb by publisher Steve Forbes that, among other things, describes Schumpeter as “the twentieth century’s foremost economist.”

I do not consider Schumpeter entitled to be called the most influential economist of the past century―that distinction unfortunately belongs to John Maynard Keynes, and Milton Friedman surely deserves the second place. As for Schumpeter’s rank as a prophet or as the intellectually foremost economist, I would place him below Ludwig von Mises and F. A. Hayek.

Nevertheless, Schumpeter was unquestionably one of the most important economists of his day, and his work has continued for good reason to attract readers ever since his death in 1950.

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At the center of the health care debate is the simple – but profound – question of whether government can deliver services, in this case health care services, better than private enterprise sensibly regulated.   President Obama clearly believes that the ‘public option will not only be more equitable but more efficient as well – a claim he made when he spoke to the Joint Session of Congress earlier this year.  Of course, nothing could be further from the truth.

The reason Obama is wrong, and the Left in general on issues of public options versus private enterprise, is simple human nature.  When it comes to such matters, it was never so well explained as by the legendary Milton Friedman:

“There are four ways in which you can spend money.  You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else.  For example, I buy a birthday present for someone.  Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.  Then, I can spend somebody else’s money on myself.  And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!  Finally, I can spend somebody else’s money on somebody else.  And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get.  And that’s government.”

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The Norwegian Nobel Committee wanted to let everyone know that they really like Barack Obama. They approve of his political views and they want him to remake the world according to his vision.  Okay, we get it.  The Norwegians, one of the most homogeneous societies in the world, whose sole significant imprint on the world stage is the annual awarding of this increasingly worthless prize, arrogantly assume the role of moral arbiters of United States politics.  Thanks.  Appreciate it. 

It is blatantly absurd to award the Nobel Peace Prize to a nine-month president with absolutely no foreign policy achievement of note.  Especially when there are so many other fields where the Academy could justify lavishing glory, (and money–one wonders what POTUS will do with the cash?) on their secular savior. 

 President Obama has written two highly acclaimed (by the left) books.  Dreams from My Father is his accounting of his unique life story and his journey to understand his roots and his father’s abandonment of him and his mother.  It was called, “the best-written memoir ever produced by an American politician,” by fawning sychophant Joe Klein.

 His second book, The Audacity of Hope (the first campaign flier published by Crown) was his soaring vision of a nation and world guided by the kind of social justice that only a community organizer can envision.  No less a literary critic than Gary Hart called Obama a, “figure who possesses perseverance and writing skills that have flashes of grandeur.”  The book occupied the New York Times Bestseller List for thirty weeks and won a Grammy to boot.

Almost any writer would kill to have sold as many volumes and have his or her books become so influential.  Surely the Nobel Prize for literature would have been much more justifiable.

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