Milton Friedman Debunked… by Milton Friedman
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Milton Friedman predicts that “Obama’s reckless monetary policies” will spur uncontrollable hyperinflation, leading to the collapse of the dollar and the destruction of the United States as a super-power and a democracy. So says a new report from the illustrious Newsmax propaganda group.
This is either very funny, or very scary, because either this interpretation of Friedman is right and the Apocalypse is near, or this interpretation of Friedman is wrong, and this most arrogant of economic theorists will have erased any credibility he might ever have had by getting thrust into a wild-eyed apocalyptic prediction that could easily never come to pass.
Friedman’s radicalism will be revealed to be the productions of a fantasist and a manipulator whose theories are in fact not economic at all, but an upgraded version of folkloric utopian visions, fueled by dogma and prejudice.
The wild accusations against Pres. Obama’s economic recovery policies are rooted in a fundamentally disingenuous interpretation of a government report, as framed in the language of ideologically driven news outfits like Newsmax. The claim is that the “maximum exposure” the federal government could experience in connection with bailouts of financial institutions is $24 trillion. The figure is distorted for political reasons, and the implication that all thus money will be “lost”, as suggested by the word “exposure”, is untrue.
Newsmax, of course, just lies. $24 trillion is not the total amount of actual cost being hidden in a sinister plot by a left-wing conspiratorial government, but rather the total projected worst-case scenario of potential “exposure” to loss over time, if all efforts to rescue the financial sector fail, money lent is never repaid, by anyone, and the businesses in question fail, thereby depriving the government of revenues.
First of all, it’s not true that government money given out by the government is the same as money lost by individuals and corporations; such “loans” are fundamentally different, and don’t actually need to be fully reimbursed in all cases in order for taxpayers to have received their return in kind or in cash. (The complexities of this can be explored elsewhere, but suffice it to say, the government buys something with every dollar it spends, and the benefit of the spending often outweighs the cost. Just ask a pro-industry laissez-faire hawk if we should start spending significantly less pubkic money on Defense.)
Newsmax also seeks to disseminate the lie that Pres. Obama is responsible for the financial mess, responsible for the intransigence of bad-actor bankers and responsible for plotting George W. Bush’s ‘TARP’ program, which gave out over $700 billion in order to shore up the banking system. The fact is that Red October 2008 was a laissez-faire Republican’s last-ditch solution to a problem brought about by his own reckless mismanagement of all things economic, financial or related.
The implication, furthermore, of these unfounded projections as related to the writings of Milton Friedman, is that somehow the whole fiscal mess is the result of actions taken after it hit. Or, put another way, Friedman is being said to be useful in attacking the government for not effectively regulating financial markets under the surgical presidency, after the man himself spent decades persuading more than one generation that regulations must be thrown out the window in order to foster the inherently virtuous tendencies of an unregulated market.
The fiction of Milton Friedman is now, effectively, being debunked by the fiction of Milton Friedman’s legacy. The economist has been exposed as having no clothes by a careless confluence of ideological hacks and opportunistic interests with no need to make coherent policy arguments.
We must all rake care that when we read economic analysis, especially when it comes in the form of economic oracle, that we are reading material based on evidence, actual trends, and a concern for the resilience and sustainability of the system (not the status quo, but the economy broadly). we must take care not to let the inflated claims of reckless ideologues steer us off a better, healthier, more ingenious way forward.
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