Freidman Vs. Galbraith Or Is It Keynes? : Market Remarks

First was Paul Krugman, who mused Where Are the Friedmans of Yesterdyear?

But there’s another important factor. Modern conservatism doesn’t have Friedman-like figures — people who would be prominent economists thanks to their research whatever their politics, who are also public intellectuals– because it doesn’t want them. The movement prefers hacks, who needn’t be even minimally competent but can be counted on to defend the party line without any risk of taking an independent stand.

Nick Rowe didn’t like it very much so he brought in Galbraith.

How come no economist on the right is asking “Where are the Galbraiths of yesteryear?“? It’s because Milton Friedman won the debate, and John Kenneth Galbraith lost. Both Friedman (on the right) and Galbraith (on the left) were once leading public intellectuals and economists. I used to read them both. I wonder how many young economists have even heard of Galbraith?

Cullen Roche took exception to the pot-shot at Galbraith and brought in Keynes.

First, Rowe’s shot at JK Galbraith is misleading. Galbraith was a Keynesian. Friedman’s battle wasn’t with Galbraith as much as it was with JM Keynes. But of course, Keynes wasn’t around to fight with Uncle Milton. And Friedman didn’t beat Galbraith or Keynes. After all, you don’t hear anyone declaring that “we’re all Friedmanites now”. Keynes has been and remains the most influential economist of all time.

Cullen then summarized Friedman’s Monetarism quite well too:

Inflation is a greater concern than unemployment.

Inflation is always and everywhere a monetary phenomenon.

An independent Central Bank is the ideal policymaker.

Free and unfettered markets are inherently stable and only fail when government fails.

The Non-Accelerating Inflation Rate of Unemployment (NAIRU).

The importance of expectations in macro models.

We also agree with his observation, “Friedman has influenced economics tremendously over the last 40 years and the world is slowly digging its way out of his mistakes. After all, while Friedman might have won the economic battle of the 70’s, he’s losing the economic war.”

Here is The Economist, which started all this.