This is a rather long lecture by Milton Friedman on the issues of government in medical care. As it is so long I’m not going to write a lot, but you should watch it because, despite being over 3 decades old, every word is still very relevant.
Tag Archives: Milton Friedman
The great Milton Friedman on the ethics of capitalism.
So I tried to stay away from writing any political blogs for a few days, but as you can see that didn’t work.
Because Paul Krugman decided once again to spew his mentally challenged word out to the public. This time he tried to libel Mitt Romney. I’d even go as far as saying Romney should sue, but as I have serious doubts Krugman would be found mentally competent to stand trial for his actions, I know that won’t happen.
What did he say?
Well at the start of a long argument full of inane claptrap, he states:
Speaking in Michigan, Mr. Romney was asked about deficit reduction, and he absent-mindedly said something completely reasonable: “If you just cut, if all you’re thinking about doing is cutting spending, as you cut spending you’ll slow down the economy.” A-ha. So he believes that cutting government spending hurts growth, other things equal.
He then goes on to use this quote and some other random facts to suggest that Romney is a closet Keynesian. I won’t bore you with the whole set of facts, I’ve frankly seen better arguments from rabid conspiracy theorists on the moon landing (just so no one takes that quote out of context, I do believe that we landed on the moon numerous times).
Okay so before I get to what Romney actually said (I know what a shock that this quote was grossly taken out of context) let’s talk about something that Paul Krugman knows less than nothing about: Macro-Economics.
There are three main schools that are relevant to this discussion. Keynesians who argue that when an economy suffers the government should infuse cash into the economy and fiddle around with the prime interest rate to boost growth. Then you have the Austrians (Hayek) and Monetarists (Friedman) who while they would argue on a lot of things would both agree that the government should have little to no influence in the economy (beyond providing a bare bones safety net at local levels…and for Monetarists too at a regular rate increase the amount of currency in the system to prevent deflation). (This is of course grossly simplified but you don’t want me to get into the math of it, it would just bore you to death).
Now our government, and most governments since the Great Depression, have embraced Keynes to one degree or another and most have yielded the same problems that Austrians and Monetarists said they would. The problem with infusing cash into the economy through stimulus programs is that it works great in the short run, but the minute you pull the money back it stops working. Stimulus is a lot like black coffee, as long as you keep drinking it, it works…but the longer you go the more you need, and the minute you stop, you crash. No Austrian or Monetarists I know of would say that stimulus doesn’t have an immediate effect. It does. What Austrian and Monetarist economists point out is that you need an ever increasing level of stimulus to keep having the same effect and with that comes an ever increasing amount of public debt (see Greece, Spain, Italy, and Ireland…and possibly most of Europe and China pretty soon). No sane person argues that it doesn’t have an effect in the short run. What Austrians and Monetarists do argue is that (1) that ever increasing debt is often worse than the recession where you spent money you didn’t have in an effort to avoid (2) that you can’t avoid the recession, but the longer you delay it, the worse it will be (again back to my coffee analogy if you just got sleep when you were first tired you would only need 6-8 hours sleep, but after a full all-nighter you will now need 9-11 hours sleep to recover) and (3) the government interference during your stimulus package actually hurts the mechanisms for growth and improvement within the economy making the long term effects truly disastrous. (All other things being equal). So if you have a massive spending program, say spending $4 Billion more than they take in every day, and you suddenly just cut that spending, even Fredrick Von Hayek and Milton Friedman would say, yeah the economy would slow down in the short term. They would argue in the long term that would be a pro-growth plan (but long term is something Keynesians aren’t very good at, or seeing the big picture which is why no Keynesian has ever won a Nobel Prize for macro-economics…because Keynesian ideas don’t work long term in the big picture). Now Hayek and Friedman would probably also argue that to help mitigate this problem of short term loss, since any Keynesian government has probably also mucked things up with bad tax policies and too many regulations, that you should cut the regulation and improve the tax policy which hopefully will balance out the short term hit from cutting the stimulus. (…it’s a stretch of the analogy but think of when you cut the caffeine but immediately go to the gym and thus are able to push through to your second wind).
Okay so let’s look at what Romney said.
Now you know, unlike liberals I don’t like to give just clips and sound bites, but prefer to at least offer you the link to the whole speech or article…unfortunately I can’t find that…and I looked (if anyone has a full transcript please send it to me).
But it’s not really relevant because even what I could find is enlightening.
“If you just cut, if all you’re thinking about doing is cutting spending, as you cut spending you’ll slow down the economy. So you have to, at the same time, create pro-growth tax policies.”
Now notice the second part of that statement. A statement one might hear out of Friedman or Hayek. Improve the tax policy to counter the immediate hit in the short term. And he tried (didn’t always succeed) to cut regulation and taxes in Massachusetts and has said he’s going to cut regulation and taxes when in the White House. So he sounds like a Monetarist, acts like a Monetarist and behaves like a Monetarist*…so Krugman and Santorum’s idiot followers say he’s a Keynesian. How does that work.
*I didn’t say Austrian, because Ron Paul is in the Austrian school of economics and I do see a few differences between the two.
But let’s take a larger look at this. Do you notice that YouTube clip is from a liberal group? And Krugman is trying to hit Romney for being a Keynesian. And this was also heavily reported on MSNBC and a few other liberal outlets. Now if he really was a Keynesian, and therefore one of the liberals, wouldn’t they keep this to themselves, wouldn’t they try to hide something that could be used against Romney. (You know, like their complete silence on Santorum’s long history of pro-union, big government, intrusive policies). I mean if he really was that liberal, they would want him to get the nomination, that way they would be guaranteed a liberal no matter what happened. It’s almost like they’re really afraid that this guy won’t take a pen-knife to the government in a few symbolic cuts but rather take the machete to the bureaucracy. It’s almost like they’re trying to help their big government friend Santorum in any way they can. Oh, but that would mean that Santorum supporters have to be the dumbest idiots in the world to play right into their enemies hands.