Milton Friedman’s Century

Today would have been the 100th birthday of Milton Friedman, the economist and author who helped inspire some of the most important economic policies of our time and helped millions of people escape poverty. Friedman doesn’t get much recognition outside of economic circles, but his achievements in that field were more than just writing a few textbooks. He helped change the face of the American economy for the better.

When Milton Friedman won the Nobel Prize for Economics in 1976, the world was enamored with the ideas of John Maynard Keynes, who taught that government spending would somehow produce a “mulitplier effect” that would lead to economic growth. The theory was that if the government were to spend $1 it would produce more than $1 in economic activity. In the 1960s, Friedman famously wrote that “we’re all Keynesians now”—a position later adopted by Richard Nixon in 1971.

In the 1950s through the 1970s, one could credibly think that the future lay not with free markets but with centrally-planned economies. Keynesianism was the dominant theory in economics and government policy. Governments across the globe were expanding the reach of central planning in a whole host of economic sectors. The ideas of the Austrian Economic School were dismissed as crackpot theories.

But then, the crash hit.

Friedman’s Revolution

In the 1970s, the world economy entered into a massive downslide. The Arab oil embargo pushed gas prices through the roof. But more critically, something happened that Keynesian theory said was impossible: stagflation – high inflation and economic recession. Conventional Keynesian theory taught that inflation and economic recession were opposites and could not happen at the same time. Yet in the 1970s, that is precisely what happened.

Across the globe, politicians tried the conventional Keynesian remedies. In the United States, Richard Nixon instituted wage and price controls to try to stop inflation, an effort that appeared to work at first until it led to massive shortages of goods. Governments tried to spend their way out of the recession, to little forward growth. The world economy was hanging by a thread, and the conventional economic theories were not helping the world pull out of its economic recession.

But it was Milton Friedman that popularized the way out of the mess. Friedman had already chipped away at the intellectual foundations of Keynesianism. He observed that Keynesian spending and the Keynesian multiplier did not work in practice—once the spigots were turned off, a fiscal hangover resulted. Because there was no new production happening to support all the extra spending, the result of Keynesian stimulus was inflation and recession. Governments wanted to try to inflate their way out of the borrowing costs of all the extra spending, which only made things worse. Further, government “investment” was taking place at the expense of private investment that would produce long-term growth.

Friedman’s theories were right, and his work led him to receive the Nobel Prize in 1976. It was not until the end of the 1970s into the early 1980s that leaders such as Ronald Reagan and Margaret Thatcher embraced his ideas that the world economy truly began to recover.

Free To Choose

But Friedman was more than just a theoretical economist. He was a gifted philosopher and writer as well, and his work on why free markets are so important to a free society is some of his most important work. His first major popular work, Capitalism and Freedom went into the details of why the economic theory of capitalism was so deeply entwined with having a free society. When it was first published, Capitalism and Freedom was a revolutionary work: Friedman advocated such bizarre notions as a “negative income tax,” an all-volunteer military, and school vouchers.

Friedman continued to popularize his pro-free market ideas in the press, writing columns for Newsweek and other publications. But it was in 1980 when Friedman published one of his most accessible works, Free to Choose, that Friedman’s ideas started truly influencing the popular conversation.

Friedman dedicated himself to pursuing advocacy for free markets and limited government, and he did it with a sense of clarity and purpose. He was able to explain why even the most well-intentioned government programs are thwarted by the complexity of a modern economy. The following clip from the Donohue show in the 1980s shows Friedman at his best:

Friedman, of course, had the better argument, and was able to not only write about economics, but to get millions of people to look at economics in a new way. Instead of viewing economics as the “dismal science,” concerned with the shuffling of abstract value, Friedman popularly imbued economics with a moral aspect. Economics was about maximizing the freedom of the individual rather than the collective or the State. It was about ensuring that individuals were best able to pursue their own ends, provide for their own families, grow their own businesses, and prosper. This shift seems common-sense to us now, and that is due in large part to the influence of Milton Friedman.

A Legacy of Freedom

Today, some of the revolutionary ideas in Capitalism and Freedom are a common part of our day-to-day lives. Milton Friedman pushed for an all-volunteer military prior to the Vietnam War, and today the military is and will remain an all-volunteer force. Friedman’s idea of a “negative income tax” blossomed into the Earned Income Tax Credit, a system where people in poverty who choose to work are rewarded for their efforts with a payment from the government. Instead of welfare, which subsidizes poverty, the EITC encourages work and employment. In 2010 alone, the EITC was responsible for lifting an estimated 5.4 million Americans out of poverty. Friedman’s ideas have lifted 200 million people from poverty into prosperity, an achievement that will stand the test of time.

Now, more than ever, we need leaders who will carry Friedman’s mantle of freedom. Keynesianism, discredited in the 1970s and later by the Japanese “lost decade” in the 1990s is making a resurgence. It isn’t that Keynesian theories suddenly work better than they did in the past, it is that governments are using Keynesianism as a rationale for consolidating political power and justifying more and more control over the world economy. Friedman would have seen right through these efforts.

Just as it was in the 1970s, what the world needs now is not more central State planning, but more economic freedom. The solution to our economic problems is to unleash the creative energies of our people and to get government out of the way of economic growth. Friedman understood this from both a philosophical and a practical viewpoint. Friedman was right back then, and he is right today. And if we listed to his wise counsel again, our economy can come roaring back once again. Milton Friedman’s legacy of freedom can bring millions more from poverty to prosperity again if we are only willing to listen.

Reagan At 100

This Sunday marked what would have been the 100th birthday of Ronald Reagan, the 40th President and the “Great Communicator.” Reagan’s Presidency still shapes American politics even though he left office over 20 years ago. Conservatives continue to idolize him, and even liberals (including President Obama) try to take on his mantle from time to time.

But why? What is it that made Reagan stand out?

The Great Communicator

Reagan had one of the rarest gifts: the ability to take complex political philosophy and communicate it clearly and effectively. Take Reagan’s 1964 masterwork A Time for Choosing:

Even though this speech is over 40 years old, it still stands the test of time. It encapsulates the heart of conservatism as a political philosophy in a way that is clear and straightforward. Reagan had a singular talent for taking complex political ideas and distilling them down to their essentials. Few politicians have such a gift. He didn’t need to rely on the cheap political tricks that have become a standard in political rhetoric. He was a master political communicator, and there are only a few who come close.

But what sets Reagan apart from the rest was that he was not only a great communicator, but he was a man of ideas. Far from the “amiable dunce” that was portrayed in the media, Reagan’s voluminous writings and notes from his radio addresses show that Reagan had a mind like a steel trap. He was fascinated with the details of public policy and how policies effected everyday Americans. From health care to taxes, Reagan spend years studying the details of public policy.

And there is a lesson there: Reagan did his homework. It’s not enough to be a skilled communicator: in order to be a truly effective President, you have to know the issues. Reagan had years of experience: as Governor of California, as a radio host, and as political candidate. He was able to explain the issues so clearly because he understood the issues himself in depth.

The Liberator

But ultimately, Reagan was more than a political icon. He was one of the instrumental figures that helped end the Cold War. It’s easy to forget that even in the 1980s, many in the West thought that the Soviet Union would be with us for decades longer. But Reagan spent much of his life fighting the evils of Soviet Communism. He had the moral integrity to call the Soviet Union what it was: an evil empire. Just as now, the foreign policy establishment didn’t have the courage to stand up for principles of human rights. But Reagan pushed on regardless.

And this tenacity helped fell an empire:

When Reagan told Gorbechev to “tear down this wall” it sent shock waves through the Iron Curtain. Ironically, the State Department, and even some in Reagan’s own Cabinet thought that those words should have been removed. But Reagan insisted they remain, and a seminal moment in Cold War history was born.

It isn’t fair to say that Reagan singlehandedly won the Cold War. But he was instrumental in the process of tearing down the Iron Curtain. The Soviet Union may have collapsed from its own internal contradictions—Reagan was right that Marxism-Leninism would be consigned to the ash heap of history—but it could have lingered on for decades.

The Optimistic American

But ultimately what made Ronald Wilson Reagan such a lasting figure in American politics is that he embodied the optimism of a nation. He saw America as that shining city on hill, and it came through in every speech. Reagan wasn’t a cynic who saw political power as its own end. He wasn’t another self-serving politician. He was an optimist who believed that America’s best days were still ahead.

And that is why Reagan is remembered so fondly today, even by his former critics.

Today, more than ever, we need leadership possessed of Reagan’s optimism and spirit. In a time when many Americans are worried about the state of the economy, the state of the world, and feeling like the American dream is slipping away, Americans are looking for someone who still sees this country as that shining city on the hill. They are looking for someone who still sees America’s best days ahead—and for whom that isn’t just an applause line.

There are few in politics that combine Reagan’s essential optimism, his knowledge of the issues, and his ability to reach out to the average American. Many have been called the next Reagan, but so far none have lived up to the reputation of the 40th President of the United States. Reagan’s cowboy boots are not easy to fill.

One hundred years after his birth, Reagan remains the paragon of modern Presidents, an almost legendary figure. But we should be careful not to let Reagan the legend overwhelm Reagan the man. There is much to be learned from Reagan’s career and Presidency, but in the end future leader should not ask “what would Reagan do” but “how would a leader like Reagan apply enduring principles to the problems of today?” (Which doesn’t exactly fit on a bumper sticker.)

So, even though it’s late, happy birthday to President Reagan. May his optimism inspire the next generation of American politicians to carry forward the principles that he defended in an amazing political life.

The Creation Of A Conservative

David Mamet has a frank and amazing essay in The Village Voice about how he ended up going from being a “brain-dead liberal” to a conservative:

I wrote a play about politics (November, Barrymore Theater, Broadway, some seats still available). And as part of the “writing process,” as I believe it’s called, I started thinking about politics. This comment is not actually as jejune as it might seem. Porgy and Bess is a buncha good songs but has nothing to do with race relations, which is the flag of convenience under which it sailed.

But my play, it turned out, was actually about politics, which is to say, about the polemic between persons of two opposing views. The argument in my play is between a president who is self-interested, corrupt, suborned, and realistic, and his leftish, lesbian, utopian-socialist speechwriter.

The play, while being a laugh a minute, is, when it’s at home, a disputation between reason and faith, or perhaps between the conservative (or tragic) view and the liberal (or perfectionist) view. The conservative president in the piece holds that people are each out to make a living, and the best way for government to facilitate that is to stay out of the way, as the inevitable abuses and failures of this system (free-market economics) are less than those of government intervention.

I took the liberal view for many decades, but I believe I have changed my mind.

Mamet’s piece is well worth reading, especially for those who are “brain-dead liberals” as it explains some of the reasons why Mamet drifted away from liberal orthodoxy. He ended up re-examining many of his old assumptions and prejudices and finding them lacking: his distrust of the military, his dislike of corporations, his view of government. He asks one of the most important questions that a person can ask about political philosophy:

And I began to question my distrust of the “Bad, Bad Military” of my youth, which, I saw, was then and is now made up of those men and women who actually risk their lives to protect the rest of us from a very hostile world. Is the military always right? No. Neither is government, nor are the corporations—they are just different signposts for the particular amalgamation of our country into separate working groups, if you will. Are these groups infallible, free from the possibility of mismanagement, corruption, or crime? No, and neither are you or I. So, taking the tragic view, the question was not “Is everything perfect?” but “How could it be better, at what cost, and according to whose definition?” Put into which form, things appeared to me to be unfolding pretty well.

Mamet hits on the fundamental difference between liberalism and conservatism as political philosophies in 21st Century America. Liberalism is an ideology that seeks perfection: we have to give everyone healthcare, we have to end poverty, we have to make everyone in the world “respect” us, we have to stop all semblances of racism. Those are the imperatives of liberalism. On their own, and as abstract goals, there’s nothing wrong with them at all. Who wouldn’t want to end poverty? Who wouldn’t want to see a world without racism, war, oppression or dominance?

Where liberals fail to understand conservatism is that they seem to think that conservatism stands for the proposition that war, racism and poverty are all fine and we shouldn’t care about them. That facile misunderstanding is why liberals never really seem to be able to engage with conservatives on a fundamentally deep level, and why liberals tend to ascribe all sorts of sinister motivations to conservatives.

Mamet, however, hints at the real basis for conservatism. We can’t cure war. We can’t end all poverty. We can’t make people into angels when they are not. The fundamental principle of conservatism can be roughly summed up into this: “sometimes life just sucks.” Even if we could fix the problems that create war, poverty, racism and injustice to do so would be to have a society robbed of free will—because the root of all these problems are found in human nature itself. That’s why Mamet rightly describes conservatism as the “tragic” view of human nature and liberalism as the “perfectionist” view of human nature. Conservatives recognize that there is no permanent solution for the ills of mankind—there are only advances which can ameliorate our conditions. We can’t create heaven on earth, we can only fumble around as best we can.

That is why liberals and conservatives don’t get along, and politically may never will. (Personally, of course, it’s a different matter. I’ve known many ardent socialists who are far more engaging than many of the people on my political side of the aisle. Sometimes one must simply agree to disagree.) A liberal sees a problem like health care and understands that the only viable solution is to make sure that everyone gets health care for free. It doesn’t matter whether or not that particular goal is attainable. It’s why liberals don’t tend to discuss things like cost/benefit analyses or economic concerns or questions of feasibility. The goal is to give everyone health care, and if that goal is not reached then the whole liberal world order breaks down. If we can’t give everyone health care for free than liberals have to tacitly acknowledge the central conceit of conservatism: that human nature doesn’t allow us to reshape society to our Platonic ideal. Then all liberalism becomes is a pale shade of conservatism. Without liberalism’s central conceit that collective action can radically transform the world, liberalism becomes rather hollow.

That doesn’t at all mean that liberals have bad motives—quite the contrary liberals almost always are idealistic in some fashion. The problem is that liberalism can never really mesh itself with reality: liberal means can never achieve liberal ends. The welfare state perpetuates a cycle of dependence. A foreign policy of naïvete emboldens dictators who subsequently move to slaughter more innocents. A government that takes it as its mission to help people ends up restricting the freedom of all.

My biggest criticism of liberalism is that it is too idealistic. If you’re absolutely convinced of the righteousness of your cause, why bother to examine your beliefs? At that point, an ideology becomes stagnant and inflexible. (It should be noted that Andrew Sullivan argues in his book A Conservatism of Doubt that conservatism is stagnating itself. His criticism aren’t always on the mark, but are worth examining.)

Liberalism today is a stagnant ideology. Liberals may win election (although usually be masquerading as moderates), but liberalism lacks any real understanding of itself. Most liberals these days begin and end their political understanding with their dislike of President Bush (who is not only not the living symbol of conservatism, but not particularly conservative at all in many respects). For one, Bush is a lame duck President. More importantly, any ideology that defines itself by what it is not is barely an ideology at all.

Mamet’s conversion from “brain-dead liberal” to conservative happened because he started to think more deeply about why he believed what he believed. This country would be much better off if more people—liberal or conservative—did the same.

Conservatism And Catholic Social Thought

Michael Gerson has a piece that tries to paint the GOP as a party caught between libertarianism and Catholic social thought. As he explains it:

There are, in fact, two belief systems contending for the soul of the Republican Party, but one is not liberalism. The two intellectually vital movements within the Republican Party today are libertarianism and Roman Catholic social thought — a teaching that has influenced many non-Catholics, including me.

The difference between these visions is considerable. Various forms of libertarianism and anti-government conservatism share a belief that justice is defined by the imposition of impartial rules — free markets and the rule of law. If everyone is treated fairly and equally, the state has done its job. But Catholic social thought takes a large step beyond that view. While it affirms the principle of limited government — asserting the existence of a world of families, congregations and community institutions where government should rarely tread — it also asserts that the justice of society is measured by its treatment of the helpless and poor. And this creates a positive obligation to order society in a way that protects and benefits the powerless and suffering.

The problem that Gerson runs into is that he assumes that government is the proper institution for “racial reconciliation, the problems of addiction or at-risk youths, or the economic prospects of the poor.” The whole point of the modern conservative movement is the realization that the imprecise and blunt tool of government is specially the worst instrument for dealing with those societal ills. Programs like “The Great Society” failed because they relied on the coercive power of government to achieve ends that cannot be met by a government program. No government program can create racial reconciliation because racial animus is a personal issue and government cannot—nor should it—have the ability to change the human heart. No government program can cure addiction because the only way to cure addiction is for addicts to want to get treatment. No government program can truly fix the economic prospects of the poor because government interference in the market exacerbates rather than cures a lack of upward mobility.

Government is, in short, the wrong tool for the job.

Catholic Social Thought does not require the sort of top-down solutions that Gerson seems to advance. In fact, such solutions violate a key tenet of Catholic social teaching, the principle of subsidiarity:

Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.

— Pope Pius XI, Quadragesimo Anno, 1931

Gerson is right that Catholic social thought, as well as conservatism, includes a duty to help the less fortunate. However, that duty is a personal one. Giving more money to government isn’t compassion. There is no such thing as compassion-by-proxy, and there certainly is not such a thing as compassion through advocating higher levels of taxation by others.

Gerson asks what help an “anti-government” conservatism offers to America’s inner cities? To that question the response should be, “what help has years of fostering a culture of dependence on government been?” Gerson misses the point of the last few decades of modern conservatism—dependence creates poverty, while encouraging self-reliance reduces poverty. It was this principle that drove Gov. Tommy Thompson’s efforts at welfare reform, which in turn inspired the 1996 Welfare Reform Act. The result of those reforms was to get millions of people off the welfare rolls and away from the downward spiral of more and more dependency.

While there is no doubt that Gerson’s motives are pure, he does not understand the basis of Catholic social thought, especially the concept of subsidiarity. There is a reason why Catholic social thought matches the two concepts of solidarity and subsidiarity as one. Neither one works without the other. Standing in solidarity with the poor isn’t enough if one tries to pass off that solidarity through impersonal organizations which subsume those small institutions that hold the social fabric together. Subsidiarity only works when individuals work with those smaller organization in solidarity with those in need.

Does the conservative movement need to be stronger in social concerns? Absolutely. Does that mean abandoning conservative principles? Absolutely not. Liberalism lacks an understanding of subsidiarity. Conservatism as an ideology is one that recognizes the value of subsidiarity at its core. Moreover, conservatives are no slouches on the solidarity part, as witnessed by evidence that conservatives, especially religious conservatives, are more likely to give to charity.

Big-government conservatism isn’t compatible with core principles of Catholic social thought, and it’s not especially conservative either. American compassion is not expressed by the size and scope of government, it is expressed by the compassion of individuals and small groups to effect real change. To disturb that “right order” Pope Pius XI described in Quadragesimo Anno is to lose sight of not only the principles of conservatism, but the principles of Catholic social thought as well.

What’s The Big Idea?

Michael Barone takes a look at the major parties and asks why neither of them seems to have any sort of major theme. The Democrats are running on the anti-ticket, anti-war and anti-Bush, but being against something doesn’t say much about what they actually believe as a party. The Republicans are running as the Ronald Wilson Reagan Memorial Party, which would be nice except for the fact that this isn’t 1980, the GOP isn’t running against Jimmy Carter, and none of the GOP candidates are Reagan.

So what does either party really believe in? Barone himself wonders:

Neither party is presenting a narrative, as the Roosevelts and Reagan did, that takes due note of America’s great strengths and achievements. Each seems to take the course, easier in a time of polarized politics, of lambasting the opposition. The Democrats suggest that all our troubles can be laid at the door of George W. Bush. The Republicans, noting Bush’s low job ratings, complain about the disasters that will ensue if Hillary Clinton is elected. All these may be defensible as campaign tactics. But it is not a pudding that can successfully govern.

Neither party seems to have much in the way of a “big idea” or any sense of what it would do short of winning the election. We’ve already seen that dynamic in play with the Democratic takeover of Congress—beyond winning the election, the Democrats in the House and Senate have little of which to be proud. Then again, the Republicans have no cause to feel superior in that regard.

The dynamic of American politics has become polarized and predominantly about power for power’s sake. This dynamic has produced a political culture that is mired in corruption and deeply unpopular with the electorate. Yet neither party seems all that much interested in change. The Democrats are about to nominate consummate political insider Hillary Clinton, a poster child for political polarization in modern politics. The Republicans seem to be increasingly running against Hillary rather than on the strength of their own convictions.

Ultimately, it’s the voters who bear the blame for the sad state of American politics. In a democratic state, politics institutions tend to give the people what they want: and partisan poison sells. How long that will be true is anyone’s guess, but the supposed “alternatives” are just more of the same. The Daily Show and other parts of the political counterculture these days just feeds an unhealthy skepticism of politics. Instead of looking for solutions, it seems to be easier to laugh at the fact that American politics is failing American principles.

What this country needs is a pragmatic reformer willing to work across the partisan divide and work towards real solutions to America’s problems based upon fundamental shared principles.

Sadly, there isn’t such a person in American politics today, and if there were, they’d be ripped to shreds by the rest of the field.

American politics lacks a big idea because Americans are more interested in political warfare than solutions. Blaming parties and candidates ultimately puts the impetus on change in the wrong place. Our political system gives us exactly what we want. That is its great strength and also its fatal weakness, and right now we’re getting the political culture we’ve created. If we want change, it has to begin from the bottom up rather than the top down.