The Truth about Milton Friedman

David Henderson has a detailed reponse on the Cato-at-liberty blog to a New York Times article on the economic legacy of Milton Friedman.

The Times piece presented the view that Friedman’s free market ideas were to blame for current economic problems (but not for recent economic growth) – i.e. that “unfettered markets” have failed.

Henderson responds that we haven’t adopted enough of Friedman’s ideas, that government regulations are to blame for many financial problems, and that we have had anything but unfettered markets (“It would be more accurate to say, ‘a bipartisan chorus has decided that fettered markets need to be fettered more.'”) :

Markets haven’t been seriously free of regulation since before the Great Depression. There were some major deregulatory victories—in airlines, railroads, and trucking—but interestingly, these victories preceded the last quarter century—they happened in the late 1970s and 1980, under President Jimmy Carter. And they led to good results—cheaper air travel and shipping and more accountability for truckers and railroads, to name two. It’s true that people give lip service to economic freedom. But the current president nationalized prescription drugs for the elderly, nationalized airport security except in five cities, and dramatically expanded federal intervention in education. The previous Congress banned Internet gambling and the current Congress has banned certain kinds of light bulbs. The government is now pushing people into more-expensive sources of energy. State and local governments have passed laws that prevent owners of bars and restaurants from allowing smoking. Congress in the 1990s started to dictate that insurance policies cover certain medical procedures. And notably, federal regulations from mortgage subsidies to the Community Reinvestment Act encouraged ill-advised investments. Those are some of the increases in government regulation. There have been few decreases.

Henderson goes on to discuss Friedman’s philosophy and contributions to the field of economics.