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Thursday, November 16, 2006
One of the most influential and consequential economic thinkers since Adam Smith has passed away. Milton Friedman has died at the age of 94. Vivien Lou Chen writes this about Friedman at Bloomberg.com:
Milton Friedman, the Nobel laureate economist who shaped the philosophies of Ronald Reagan, Margaret Thatcher and successive Federal Reserve chairmen, has died, his daughter Janet said.
Friedman's theory that inflation results from too much money chasing too few goods inspired a generation of central bankers, beginning with Paul Volcker, who was Fed chairman from 1979 until 1987. Alan Greenspan and Ben S. Bernanke also credit Friedman's work as a blueprint for policy making.
"Friedman's monetary framework has been so influential that, in its broad outlines at least, it has nearly become identical with modern monetary theory and practice," Bernanke said at a conference in October 2003 when he was a Fed governor. He became chairman in February 2006.
Friedman wrote, co-wrote or edited 32 books, including "A Monetary History of the United States, 1867-1960" with Anna Schwarz in 1963, and argued that the goal of monetary policy should be long-term, stable growth in the supply of money. He championed individual initiative and deregulation and influenced decisions from severing the dollar's peg to gold in the early 1970s to ending the military draft.
"It's hard to think of anyone who's had more of a direct influence on social and economic policy in this generation," said Carnegie Mellon University Professor Allan H. Meltzer, who is preparing a two-volume history of the Fed and has been an adviser to the Bank of Japan. "He, along with others, promoted the idea of low inflation and a more disciplined central bank."
In his later years, Friedman advocated that the Fed adopt an inflation target, a numeric price goal which the central bank should pledge to hit over a specified period of time. He supported George W. Bush's failed effort to overhaul Social Security, counseled California Governor Arnold Schwarzenegger and predicted the demise of the euro.
With his trademark pronouncement that inflation was "always and everywhere a monetary phenomenon" Friedman was among the Fed's most vocal critics as inflation accelerated through the 1960s and 1970s. He said the central bank failed to control the supply of money, should be stripped of its autonomy and forced to focus on keeping money supply growth steady at about 3 percent.
The Fed kept its independence. Friedman's arguments were acknowledged, though, when Volcker launched an attack on inflation in 1979 by targeting money supply and pushing up interest rates to crush inflation.
The Brooklyn-born Friedman traveled the world promoting balanced budgets and limited state spending. He joined Reagan's Economic Policy Advisory Board in the early 1980s, helping guide and reinforce the president's views on government largess and tax reduction.
He served as an adviser to Thatcher, U.K. Prime Minister from 1979 to 1990, who pushed for a free-market economy, low taxation, and the sale of state-owned industries. Bush credited Friedman's ideas with bringing inflation under control in Chile, the adoption of a flat tax in Russia, and the creation of personal retirement accounts in Sweden.
Friedman's teachings at the University of Chicago helped foster the "Chicago School" of economics, known for theories associated with free-market libertarianism.
Those ideas were put to use in Chile during the 1970s and 1980s, when a group of economists trained at the University took key government positions under General Augusto Pinochet. The so- called "Chicago Boys" advocated widespread deregulation and privatization, helping Pinochet's military junta bring inflation down from as high as between 700 percent and 1,000 percent.
"He has used a brilliant mind to advance a moral vision: the vision of a society where men and women are free, free to choose, but where government is not as free to override their decisions," Bush said in a May 2002 speech at the White House to honor Friedman on his 90th birthday. "All of us owe a tremendous debt to this man's towering intellect and his devotion to liberty."
There's more at the link and also here.
Mark Steyn's new book America Alone: The End of the World as We Know It has received a lot of praise, and it's one of the books I hope to get to soon. In the meanwhile, this review by Steven Warshawsky in The American Thinker is an eye-opener.
Warshawsky admires Steyn's book as an excellent guide to the nature of the crisis presented to us by Islamic jihad, but he criticizes Steyn for not following his thesis to its logical conclusion. Warshawsky argues that if Steyn is right we are headed ineluctably toward a global war and that as a matter of national security we, and Europe, must immediately stop Muslim immigration.
Steyn reports that Western women in Europe have an average of 1.4 children, whereas Muslim women [in Europe] have an average of 3.5 children. The result is a "baby boom" among Muslims that, within our lifetimes, will completely change the European countries in which they live. Steyn's analysis strikes me as right on the mark.
Yet after spending page after page highlighting the demographic disaster that awaits Europe (and to a much lesser extent the United States), Steyn fails to state the logical conclusion, which is that Muslim immigration must be stopped. Period.
If one believes, as Steyn clearly does (with strong support from the evidence), that Muslims as a group not only are not assimilating into Western culture but are actively hostile toward the very principles upon which our societies are built, then it is "suicidal" (a term frequently used by Steyn) to permit millions of Muslims to take up residence within our countries.
Warshawsky recognizes all the problems such a drastic measure entails, but, he argues, unless we prefer to live in a state of denial about the threat posed by radical Islamism, such a step is imperative for the security of our nation.
He notes that:
It should not be surprising, then, as Steyn emphasized in a recent column, that the vast majority of Muslims worldwide feel primary loyalty to their religion ("Pan-Islamism"), instead of to the particular nations in which they live. For example, according to a recent poll (cited by Steyn), only 8 percent of Muslims living in Great Britain consider themselves British first, whereas 81 percent consider themselves Muslim first. Given the stark differences between what it means to be British and what it means to be Muslim, these poll results portend a disastrous future for the British nation. Indeed, given the gulf that exists between Western culture and Islamic culture, the growing size and influence of the Muslim world portends a disastrous future for us all.
It might be argued that Christians would also claim to be Christians first and Americans second, but the difference is that Christianity is largely compatible with the fundamental principles upon which this country was founded and until we stray further from those principles than we have so far Christians will be content to live as Americans. This is not the case with many Muslims who find the ideas of the American experiment theologically repugnant. The concept of human equality, freedom of religion, free press, and separation of Church and state are irreconcilable with their interpretation of Islamic law and tradition.
Whether we like it or not, large parts of the Islamic world have declared war on the West. Because Muslim countries, to date, have lacked the military and economic capability to wage conventional warfare against us, they have engaged in vicious acts of terrorism designed to intimidate and undermine Western society. They may soon be in position, through developments in Iran and, perhaps, Pakistan, to commit acts of nuclear blackmail or actual nuclear warfare. (And just imagine if, a few decades from now, a Muslim majority took control of France or England's nuclear arsenal, with the capability to destroy large parts of the United States.) The West can either submit to this violence and intimidation, or we can fight back. But what does "fighting back" mean?
Steyn offers ten measures we can take to "fight back" but Warshawsky notes that at least four of them amount to a tacit declaration of war against the Muslim world. In other words, we seem to have only two options: submit or fight. The only question for those not inclined to submit is what form, exactly, should fighting back take.
The debate over this question will be, I think, the most important political and cultural undertaking of the next ten years.
Joe Carter, in a post titled Conversion of the Purse, criticizes a friend for being too concerned about the economic peril of the middle class. I think I understand what his friend was trying to say, but Carter is surely right that much of that peril his friend is concerned about the middle class in America has brought upon itself by its excessive committment to a materialistic, consumerist, hedonistic lifestyle that is a poor fit with the basic adjurations of the Gospel of Christ.
I'm not sure that Carter is quite saying this, but I think it bears saying: Our greatest fault, in my opinion, is not so much that we don't do enough for the poor, but that we over-indulge ourselves. We lavish upon ourselves all manner of trinkets and baubles, eliminating every discomfort from our lives, indulging in a narcissism that makes us at once soft, selfish, and egotistical.
The temptation to yield to this decadence is unrelenting, it goes on every waking moment of our day, and the battle against surrendering to it is not fought just once and for all but must be re-fought constantly throughout our lifetimes. The cultural forces of consumerism and narcisssism arrayed against us exert overwhelming pressure, and it's so easy to just give up and give in. Yet we're called by Christ to shun the blandishments and seductions of the advertisers and keep our focus not on ourselves and our wants, but on the "higher things", what Paul called the things of the Spirit and what Plato identifies with the Good, the Beautiful, and the True. Too easily, however, we're mesmerized by the allure of things we don't need and of comforts from which we don't benefit.
I know whereof I speak, I'm embarrassed to admit, because the above criticism is uncomfortably autobiographical. I write this not so much for those who are going to read it on Viewpoint but for myself because I need to remind myself of what I've said in the previous two paragraphs far more than I need to be chiding others about it.