Noah Smith: Reality vs. Milton Friedman: Noted for August 14, 2013
Noah Smith: Noahpinion: The cruel trick played by history on Milton Friedman:
Paul Krugman wrote a blog post saying that Milton Friedman's influence has been largely forgotten in macro policy debates…. Three later posts by Krugman… get it right, I think. Friedman hasn't disappeared from policy discourse; he's disappeared from right-wing policy discourse. Friedman's ideas are pretty close to the mainstream New Keynesian idea of the macroeconomy… consumption smoothing, monetary policy rules, and a NAIRU with a downward-sloping short-run Phillips curve--all Friedman ideas. And in New Keynesian models, monetary policy reigns supreme; only at the zero lower bound is monetary policy possibly ineffective. That's a very Friedman idea too…. Now notice that Quantitative Easing, and the Fed in general, are reviled by the American right. Rick Perry famously threatened to do physical harm to Ben Bernanke for "printing more money". Ron and Rand Paul are famous for decrying QE and Bernanke, as are right-wing darlings like Peter Schiff…. Meanwhile, more sober conservative economist types, like Martin Feldstein and Allan Meltzer, are also extremely dubious of QE. And of course the Wall Street Journal is forever warning about the dangers of inflation from the policy. So the American right… despises… Milton Friedman. What they support looks a lot closer to "Austrian" economics, which Friedman explicitly denigrated.
But the right frequently uses and abuses the name of Milton Friedman. People like Rand Paul seem to identify Friedman with the concept of hard money. This is probably because Friedman was known for opposing inflationary policy in the 70s. The right remembers that policy position, but has no concept of the theory that underlie it…. The right thinks Friedman was an Austrian!… I can only imagine how Friedman must be turning in his grave. His academic legacy is probably what he would have wanted… but his political legacy has been to be conflated with some of his most bitter intellectual opponents, to have their ideas ascribed to him, and to have his own ideas reviled by the people on his own side of the political spectrum. It's as if Ronald Reagan were to be remembered mainly as a proponent of tax increases and Soviet appeasement…
