Milton Friedman vs the Austrian Perspective

Posted on by

So you are a good free market Chicago School guy.  You have rejected Keynesian economics in favor of the free market Chicago school.  You have read Milton Friedman’s “Right to Choose” and you are convinced that the free market is the way to go.

Well, maybe he is not such a free market guy.  He is, in fact, in favor of compulsory taxation, monopoly, price controls, and the welfare state.  Milton Friedman proposed the tyrannical payroll deduction in the United Sates during WW2 and it has stuck with us like a curse ever since.  He is against cartels in most areas except for money.  Though Chicago School has done many positive things in promoting liberty, its faults are glaring and can no longer be ignored after September 2008. The Chicago School was fundamental in popularizing the idea that almost all government regulations are actually lobbied for and constructed by the industries that are to be regulated to push out competition and raise costs for new competitors entering the sector.  This allows large firms to absorb regulatory costs while pushing out small businesses and new upstart companies.  The term popularized by many from the Chicago school is “Cui Bono” or who benefits?.  The Chicago School realized that in almost all cases, the big players in the industries being regulated are almost always the same beneficiaries of such regulations and are also the biggest pushers of regulation (just like today’s health care legislation and insurance companies.)  Chicago School has written hundreds of books on almost every industry when making their case but have somehow missed the elephant in the room, the Federal Reserve. So the largest monopoly of all escapes all scrutiny from the Chicago School.  Chicago School refuses to use this same method of “Cui Bono?” on the banking cartels that exist around the world in the form of Central Banks.  This seems absurd when considering that all the shareholders of central banks are private and have enormous leverage in setting the price for money (the interest rate).  So the Chicago School and Milton are completely inconsistent in their theories when it comes to money.  They are for free competition in all fields except for banking, where the Chicago school supports government sponsered monopoly.

When it comes to methodology, the Chicago School is as bad if not worse than the Keynesians.  The Chicago School and every other school of economic thought besides the Austrian School since the 1930s have viewed human beings as mathematical aggregates.  That is to say, human beings are simply numbers to be put in mathematical formulas.  The Austrian School completely rejects this because human beings are conscious actors that change their behaviors based on conditions. For example if you raise the income tax, some people will likely find other ways to generate income through investment or some other method.  Therefore, human behavior and concious actors will change how much revenue will be brought in.  All other schools of thought pretend that human behavior is for the most part unchanging and can be constructed as part of a mathematical formula. For example, if government action A is taken than B will be the result.  Ludwig Von Mises established in “Human Action” that human behavior cannot be predicted and observed in the same way that hard sciences make predictions. All particles in the universe act in the same predictable way when a force is applied to them. This is not true with human behavior.  When a new variable is applied to human interaction, humans will react in multiple different ways, each to achieve their own desired goals. Since economists can’t possibly know the goals and motives of every single person, it makes human beings almost impossible to predict the same way that chemists or other scientists make predictions with their respective studies.  This puts economics closer to the field of sociology rather than a hard science, i.e. physics, that mainstream economists’ fantasize about making economics into.  Human beings are conscious actors but the Chicago School’s methodology leads to many conclusions that are not logical because they often do not take this into account. Murray Rothbard gives the example of Milton Friedman’s negative income tax or guaranteed annual income.  Rothbard argues that it is precisely because the welfare bureaucracy is so inefficient that the United Sates is not more bankrupt than it is.  Friedman’s plan to make it more efficient by automatically sending out checks to anyone making below a certain income creates a hugely distorted incentive structure that is logically obvious but which Chicago School’s methodology seems unable to grasp.

Lastly if you still think that the Chicago School is free market consider this; Ben Bernanke is a student of the Chicago School, specifically Milton Friedman’s book on the Great Depression. Everything that Ben Bernanke has done has been lock step with what Milton Friedman had suggested should have been done during the Great Depression. Not one major economist from the Chicago School publicly protested against TARP or the mind boggling expansion of the money supply.  The Chicago School has completely capitulated to the Keynesian world view and have shown their true colors. The only school of thought that has not been toppled in the wake of September 2008 has been the Austrian School.

Here Gary North goes into some of the intellectual history of economics. Additionally, Gary North makes the argument that the intervention of 2008 was so massive that it was arguably taken even further than anything that Milton Friedman would have suggested thirty years ago.

Here is another lecture comparing Milton Friedman to the Keynesian paradigm.

Here is an article about how mainstream conservatives and supply siders are Keynesian.

 

2,333 thoughts on “Milton Friedman vs the Austrian Perspective”

  3. Great post. I was checking constantly this blog and I
    am impressed! Extremely useful info specially the last part 🙂
    I care for such information much. I was seeking this particular information for a very long time.
    Thank you and best of luck.

    Reply ↓

  6. My spouse and I absolutely love your blog and find nearly all of your
    post’s to be precisely what I’m looking for. can you
    offer guest writers to write content to suit your needs?

    I wouldn’t mind writing a post or elaborating on some of
    the subjects you write related to here. Again, awesome site!

    Reply ↓

  7. Greetings! This is my first comment here so I just wanted to give a quick shout out and
    tell you I really enjoy reading your articles.
    Can you suggest any other blogs/websites/forums that cover
    the same subjects? Thanks a lot!

    Reply ↓

  18. What i do not understood is in truth how
    you are no longer actually much more smartly-liked than you may be right now.
    You’re so intelligent. You recognize therefore
    significantly with regards to this matter, made me in my opinion imagine it from a lot of varied angles.
    Its like men and women are not involved unless it is one
    thing to accomplish with Lady gaga! Your personal stuffs great.

    All the time deal with it up!

    Feel free to surf to my web-site cuisiniste Lausanne

    Reply ↓

  19. When I initially commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is
    added I get four e-mails with the same comment. Is there
    any way you can remove me from that service? Thank you!

    Reply ↓

  26. Silberfische, auch als Silberfischchen bekannt, sind kleine, flügellose Insekten, pass away durch ihren silbrig schimmernden, stromlinienförmigen Körper auffallen und meist eine Länge von etwa einem Zentimeter erreichen. Sie gehören zur uralten Insektenordnung der Fischchen und existieren bereits seit über 300 Millionen Jahren, was sie zu echten Überlebenskünstlern macht. Silberfische sind weltweit verbreitet und bevorzugen feuchtwarme Lebensräume, weshalb sie in Mitteleuropa vor allem in menschlichen Behausungen wie Badezimmern, Küchen, Waschküchen oder Kellerräumen zu finden sind. Ihre Aktivität entfalten sie vor allem nachts, da sie äußerst lichtscheu sind und sich tagsüber in dunklen Ritzen, Fugen, hinter Fußleisten oder unter Tapeten verstecken. Optimale Bedingungen für Silberfische herrschen bei Temperaturen zwischen 20 und 30 Graduate Celsius und einer Luftfeuchtigkeit von 80 bis 90 Prozent. Sie ernähren sich bevorzugt von stärkehaltigen oder zuckerhaltigen Substanzen, wie sie in Klebstoffen von Bucheinbänden, Papier, Baumwolle, Leinen, aber auch in Hautschuppen, Haaren, Hausstaubmilben und Schimmelpilzen vorkommen. Sogar tote Insekten oder eigene abgestreifte Haut werden nicht verschmäht. Silberfische sind äußerst genügsam und können mehrere Monate ohne Nahrung auskommen. Ihre Fortpflanzung erfolgt über ein besonderes Paarungsritual, bei dem das Männchen ein Spermienpaket ablegt, das vom Weibchen aufgenommen wird. Pass away Weibchen legen ihre Eier bevorzugt in dunkle, feuchte Spalten und Ritzen, wo die Entwicklung der Larven bei passenden Umweltbedingungen innerhalb eines Jahres zur Geschlechtsreife führen kann. Ein Weibchen kann im Laufe seines Lebens bis zu 100 Eier ablegen. Silberfische durchlaufen dabei mehrere Häutungen und wachsen kontinuierlich, wobei sie eine Lebenserwartung von bis zu sechs Jahren erreichen können. Ein vereinzeltes Auftreten in der Wohnung ist meist harmlos und kein Grund zur Sorge, da Silberfische keine Krankheiten übertragen und sogar als Nützlinge gelten können, da sie Hausstaubmilben und Schimmelpilze fressen. Ein starker Befall hingegen kann auf ein Feuchtigkeits- oder Schimmelproblem im Haus hinweisen und sollte als Warnsignal verstanden werden. Ihre natürlichen Feinde sind unter anderem Ohrwürmer und Spinnen. Insgesamt sind Silberfische faszinierende, anpassungsfähige Insekten, pass away sich perfekt an das Leben in menschlichen Wohnräumen angepasst haben und deren Auftreten eng mit dem Mikroklima der jeweiligen Umgebung verknüpft ist.

    Take a look at my web site :: https://silberfische.s3.Bhs.io.cloud.Ovh.net/silberfische-dunkle-ecken.html

    Reply ↓

Leave a Reply to life insurance news Cancel reply

Your email address will not be published. Required fields are marked *