For the last few years I have been debating with right wingers on You tube, Facebook, and Twitter and I have met some good people, but some are not so smart or good. However, there are no more bigger tools than the Milton Friedman fans who shout THE FREE MARKET EQUALS FREE DUMB! Oh i just want to laugh. They are nothing more than a bunch of trained tools whose right wing economic failure of thinking has never worked. Heck, they do not even know a lot about Friedman, which in this blog I am gonna tell you somethings I hope that you learn something from this; I know i did.
Friedman is one of the most famous economist, he is just as well known as Lord John-Maynard Keynes. His theories have been used worldwide, but unlike Keynes, it seems that people are getting sick of uncle Milty because he wanting to return to the old standard of free business practices. Tell me how that has worked. Since we have started to go back to that model some, we have witnessed an economic collapse unlike anything since the great depression, all because Friedman convinced Americans that we needed to give more money to the top so they could invest and and the money would trickle down to the masses, (which never happened). With that being said, now i am gonna tell how Friedman lied, er convinced people of his ideas, think about it for a second. Who supports the free market? The Koch bros, the Mises foundation, GE, ATT, Wall mart, and there is a reason for this, free market does not benefit you the worker, who goes in, works hard, and makes the products for these rich people. Since in a market you need people to control the workers so that a business person can determine their wage, and how long they work, and what they are worth (gee, real freedom for everyone huh?) So if you have the top business running without anything to hold them accountable. So that is why Friedman was such a darling of the media, and he worked for presidents like Reagan, and Bush, because they liked the idea of having the rich have more control over their business.
In a blog a friend sent me, I am gonna show you how Friedman has used data, twisted facts, and lied about the information he has presented. One of the big ones is that Friedman has advocated for monetarism, what is monetarism? Here is the definition, from the free dictionary:
1. (Economics) the theory that inflation is caused by an excess quantity of money in an economy
2. (Economics) an economic policy based on this theory and on a belief in the efficiency of free market forces, that gives priority to achieving price stability by monetary control, balanced budgets, etc., and maintains that unemployment results from excessive real wage rates and cannot be controlled by Keynesian demand management.
So what this is saying is, that if you spend too much money the dollar will lose it’s value, and that it is not demand that runs an economy but rather production alone, and the balance of budgets, but this can be destroyed by England, under Margret Thatcher. From the guardian: Unemployment hit as high as almost 12% The manufacturing of GDP went down big time from 20.57% in 1970 to 15.18% by the 90’s so this shows that the GDP dropped. The manufacturing sector was hurt do to out sourcing, which is one of the bed rocks of free markets, and the Friedman idea. And in 2010 the GDP was down to 9.68% so there goes the idea of just letting the market give value to the economy. Not only did unemployment go up under Thatcher, but GDP also fell and 3,000,000 people where unemployed, before Thatcher came in, it was 1,500,000. So i am gonna post the ink to the guardian. Union membership went down, women’s income compared to men dropped, and interest rates sky rocketed. According to Friedman, if you let the market set the value of labor, and if the gov does not spend of get involved then the economy would be more stable, and more efficient, and that inflation would be stabilized, and then investing would go up, and unemployment would go down, yes investment went up, which caused a temporary period of growth, but household’s income went down, their debt went up as they tried to keep up with the cost of living, and unemployment did not go down. That is one of Freedman’s theories debunked easily.
Here are some others where Friedman has just out right lied. Friedman liked to twist data around. He knew that he could not win a debate outright so he twisted data so he could then put the debate in his favor. Friedman would lie about things like the The Permanent Income Hypothesis, now what is that? Well, let’s take a look. From unlearning economics:
The Permanent Income Hypothesis (PIH) states that a consumer’s consumption is not only a function of their current income, but their lifetime income as well. Since people tend to earn more as they get older, this means that younger generations will tend to borrow and older generations will tend to save. The PIH has been a key tenet of economic theory since its inception, and Friedman won the Nobel Memorial Prize for it in 1976.
1. If raw or adjusted data are consistent with PI, he reports them as confirmation of PI
2. If the fit with expectations is moderate, he exaggerates the fit.
3. If particular data points or groups differ from the predicted regression, he invents ad hoc explanations for the divergence.
4. If a whole set of data disagree with predictions, adjust them until they do agree.
5. If no plausible adjustment suggests itself, reject the data as unreliable.
6. If data adjustment or rejection are not feasible, express puzzlement. ‘I have not been able to construct any plausible explanation for the discrepancy’…
In short what Friedman did (or tried to do) was to try and make an argument for less gov, but the statistics did not match up with the information that he presented, so Friedman flat out lied. He would adjust the numbers to fit his argument. In other words he was being a dishonest twit. This is how he got people to think that it was Keynesianism that caused the economy of the 70’s to go belly up, but in reality, a lot of the regulations, where not being enforced, and that more banks and CEO’s where involved with speculative investing, also the oil shortage did not help at all either. So there was a lot of reasons why the economy of the 70’s was not very good, but Friedman took this as an opportunity to lie about how Keynseianism had failed and that gov should not get involved with the economy. Instead Friedman should have used the Relative Income Hypothesis (RIH) which says that a person’s spending is based on who they are around, kinda like you want to keep up with the Jones (that old saying). Also; from the article:
The rich save at higher rates than the poor;
National savings rates remain roughly constant as income grows;
So what this is simply saying is, that this idea of giving the rich more, that they spend, and produce is just a lie, another lie that Friedman came up with.
Here is another example of Friedman twisting data to fit his ideology.
From the same blog:
NAIRU stands for ‘Non-Accelerating Inflation Rate of Unemployment’, and it implies that past a certain level of unemployment, workers will be able to demand wages so high that they will create a wage-price spiral. Hence, policy should aim for a ‘natural’ rate of unemployment, decided empirically by economists, in order to prevent the possibility of 1970s-style stagflation.
So what does this have to do with Friedman you say? From sociodemocracy21stcentury:
Well, the notion that the interplay between workers and employers is a key determinant of the rate of inflation flat out contradicts Friedman’s oft-repeated exclamation that “inflation is always and everywhere a monetary phenomenon”. If inflation is purely monetary, then the level of unemployment should not affect it at all! However, for whatever reason, Friedman was prepared to endorse both the NAIRU and his position on inflation simultaneously.
In other words Friedman was trying to say that inflation was always the fault of monetary policy, but then no matter what the unemployment rate, it was gonna be a problem right? I do not even think Friedman knew what positions he took half the time.
And finally Friedman on the great depression, OK now this is comedy, but Friedman is saying that the federal reserve caused the great depression, for not printing enough money. Friedman is trying to blame the federal reserve for this, but facts once again trump Friedman. The overall money supply increased by 5% from 1929. to 1931, again social democracy blog is where i got this from so Friedman did not even get his own criticism right about the great depression, either that or he just flat out lied. So Friedman was just making this up and had he done the actual research then he would have seen the money supply went up, not down. What Friedman is also trying to do is show that the money supply is controlled by the central bank. But since a shift in income can decrease the money supply that would relive the central bank of the responsibility.
So right there went another Friedman lie and I do not know how on Earth this man got the awards he did for economics, oh wait? The rich, that is right. Friedman’s ideas have been debunked from everyone from Radio Hogan, to Ha-Joon Chang, it is time to put his stupid ideas to rest, they never worked, nor will they.