Friedman didn't get all of it right
Regarding Murray Sabrin's "Money supply dictates wealth" (Your Views, July 31) and Donald J. Boudreaux's "The calculus of common sense" (Other Views, July 31), the tribute to economist Milton Friedman's free market teachings:
Libertarians argue that in a perfect world, little or no government interference in the marketplace is the best and most efficient policy to follow. However, they appear unwilling to recognize that we do not live in a perfect economic world. We live in a political world where various business and social groups vie to influence fiscal, monetary and social policy.
For example, Friedman argued that there would be no need to legislate against domestic monopolies if we had no tariffs or labor unions by exposing our domestic industries to foreign competition. I would like to see any administration, Democratic or Republican, agree to follow such a policy.
Sabrin would eliminate the Federal Reserve's ability to "create money out of thin air." However, in their important "A Monetary History of the United States," Friedman and Anna Schwartz argued that the failure of the Federal Reserve to ease the supply of money was a leading cause of the Great Depression. While easing the money supply is inflationary, it benefits not only the wealthy, as Sabrin argues, but also homeowners and other debtors, whose current home values are depressed, freeing up funds they can spend on goods and services, creating jobs for others.
Boudreaux starts his praise of Friedman by recounting Friedman's exchange with Gen. William Westmorland over the proposal to end the military draft. Friedman was correct in pointing out that an all- volunteer army would require that its members receive market value and would be more "efficient." But one has to ask what this country's recent history would have been like if the children of our middle class who were enjoying college life had been drafted to serve in Iraq and Afghanistan instead.
Hackensack, July 31
Regarding "The calculus of common sense" (Other Views, July 31), Donald J. Boudreaux's paean to economist Milton Friedman:
As one of the "slaves" (Friedman's characterization of military draftees) who served during the Vietnam War, and despite my past thinking that an all-volunteer army was a good idea, it appears to me now a significant mistake. The all-volunteer army has greatly increased America's defense costs and promoted armed adventurism by neo-conservatives who believe all responses to foreign threats must be military. Common sense should suggest that diplomatic efforts are preferable to wars.
As for Friedman's limited government, most liberals like me believe government should be large enough only to be effective. If the role of government is to protect its constituency, then government needs to be large enough to regulate markets.
If anyone still believes that markets are "self-correcting," they have slept through the banking abuses and crimes that caused the recent financial crisis. Left unregulated, oil companies flout safety rules and fill oceans and rivers with oil spills; food producers sell products laced with harmful chemical additives, and corporations spend fortunes to obtain special tax breaks and "loopholes" -- all of which seems the antithesis of market freedom.
Wise public policies drive progress; unwise ones do not. So citizens have a serious responsibility in choosing their legislative representatives. In a time of massive, well-funded, professional misinformation campaigns, Americans will have to rely on "doing their own homework" if they intend their votes to create public policies that will not be thwarted by the "complexities, nuances, and dynamism of a modern economy." It will mean challenging one's own beliefs.
Red Bank, Aug. 1
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